The Government of Dominica has announced replacement of the existing tiered tax structure with a single flat income tax rate of 10 percent effective January 1, 2027.

The announcement was made by Minister for Finance, Economic Development, Climate Resilience and Social Security, Hon. Dr. Irving McIntyre, during the presentation of the 2026/2027 National Budget.

Under the new system, the current 15 percent, 25 percent and 35 percent personal income tax rates will be abolished at the end of 2026 and replaced with a single 10 percent rate.

The Minister said the measure will simplify the tax system while providing meaningful financial relief to working Dominicans.

“It is the most significant income tax relief ever granted to the people of Dominica. It will deliver meaningful savings to workers and make our tax system simpler and fairer.” he told Parliament.

The existing personal tax-free allowance of $30,000 will remain in place, meaning individuals earning $30,000 or less annually will continue to pay no personal income tax.

According to Government, the reform will leave more disposable income in the hands of workers every month. The Minister said the additional income could be used by families to meet everyday expenses, pay mortgages, reduce debt, invest in education, improve their homes or start small businesses.

“These are direct savings. One family may use the savings for shopping; another to procure a mortgage or health insurance; another may decide to save some more for rainy days or reduce their debt; while others may start a small enterprise or pursue studies—the choice is yours. In short, Mr. Speaker, the relief gives the household more room to make it,” he stated.

The Minister said the announcement builds on a series of income tax reforms introduced by the Government over the past two decades.

He recalled that when the administration took office in 2000, Dominica’s personal income tax system consisted of rates of 20 percent, 30 percent and 40 percent, while the tax-free threshold stood at just $12,000.

Following the country’s economic recovery and the successful completion of an IMF-supported programme, Government increased the tax-free threshold to $30,000 in 2009, significantly reducing the tax burden on workers and removing thousands of Dominicans from the income tax net.

Government has also progressively expanded tax deductions available to individuals.

In addition to the flat tax rate, Government announced a major change to the taxation of foreign income.

Effective January 1, 2027, residents and non-residents will pay income tax only on income earned in Dominica, removing the taxation of legitimate worldwide income.

According to the Minister, the change is intended to make Dominica a more attractive destination for retirees, remote workers, investors and returning nationals by ensuring that only income generated within Dominica is subject to domestic taxation.

The Government said the combined reforms reinforce its longstanding commitment to reducing the tax burden on individuals, increasing disposable income and creating a tax system that is simpler, fairer and more competitive while supporting continued economic growth.