The government of Dominica is abolishing the practice of compounding taxes on imported goods, a major Customs reform that could reduce the final cost of bringing products into the country.
Finance Minister Dr. Irving McIntyre, while delivering the national budget on Tuesday, announced that from October 1, 2026, Excise Tax and Value Added Tax on imported goods will be calculated solely on their Cost, Insurance and Freight, or CIF, value.
Under the existing arrangement, taxes are calculated using a base that can include other taxes and charges, meaning one tax effectively becomes part of the value on which another tax is imposed.
“At present, Excise Tax and VAT on imported goods are calculated not only on the cost, insurance and freight value…but also on other charges and taxes,” McIntyre explained.
He described the practice in straightforward terms: “That is tax compounding.”
“Effective 1st October 2026, Government will end this practice,” McIntyre announced.
Government believes the adjustment will help reduce the cost of importing goods, simplify Customs calculations and contribute to an improved business environment.
McIntyre acknowledged longstanding complaints from residents and businesses about the complexity and cost associated with clearing goods through Dominica’s ports.
“An efficient clearance system should facilitate commerce, not frustrate it,” he said.
The Finance Minister argued that Customs inefficiencies ultimately affect consumers because importers routinely incorporate administrative and storage expenses into their prices.
“Every unnecessary delay, duplicated document and avoidable storage or administrative cost is eventually reflected in the price paid by a consumer,” he said.
However, the government has also warned businesses that it expects savings from the reform to reach consumers.
Where concessions or reductions are granted, McIntyre said, they should be reflected in lower costs rather than absorbed into larger profit margins.
The implementation of the reform later this year forms part of a wider strategy to lower the cost of doing business and provide relief to Dominican households.
