Benefits of Making Business in Dominica | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN DOMINICA WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN DOMINICA WWW.MERGERSCORP.COM

4. Country Overview Dominica is a mountainous Caribbean island nation with natural hot springs and tropical rainforests. Morne Trois Pitons National Park is home to the volcanically heated, steam-covered Boiling Lake. The park also encompasses sulphur vents, the 65m-tall Trafalgar Falls and narrow Titou Gorge. To the west is Dominica’s capital, Roseau, with colorful timber houses and botanic gardens. The island is of volcanic formation. Dominica has a number of active volcanoes, although eruptions are rare. Other signs of geothermal activity include fumaroles and hot springs. In the south, Boiling Lake lies 2,300 feet above sea level; its waters are often forced 3 feet above normal by the pressure of escaping gases. The island has rich alluvial and volcanic soils. There are numerous rivers, all of them unnavigable. A range of high forest-clad mountains runs north to south, broken in the centre by a plain drained by the Layou River, which flows to the west; the highest points are Mount Diablotins and Mount Trois Pitons.

5. Executive Summary Dominica has been heralded as the region's premier nature island. Its terrain is very rugged and steep with any flatter areas restricted primarily to river valleys, the coastal areas of the north east and Bell's Wet Area in the centre of the island. There is little reasonably flat land available for expansion of human settlement. The geology is volcanic, but is now relatively stable. Dominica is a mountainous, forested Caribbean island nation with a year-round tropical climate, national parks, rare indigenous birds and the second-largest boiling lake in the world. It has significant tourism potential, but poor infrastructure and the absence of a large airport have impeded the industry's growth. The country is also vulnerable to hurricanes. With few natural resources, Dominica is attempting to reduce its reliance on bananas, traditionally its main export earner. The banana market has faced stiffer competition since the European Union was forced by the World Trade Organisation to phase out preferential treatment for producers from former colonies.

6. Introduction – Doing business in Dominica Dominica is ranked 9th best in Latin America and the Caribbean for the ease of doing business, according to the World Bank’s ‘Doing Business 2012’ study. It is ranked 5th best in this region for protecting investors. These rankings measure the conduciveness of a regulatory regime in starting and operating a business. Although the financial services industry is increasingly becoming its largest income, agriculture, with bananas as the principal crop, is still Dominica's economic mainstay. Banana production employs, directly or indirectly, upwards of one-third of the work force. This sector is highly vulnerable to weather conditions and to external events affecting commodity prices. Dominica's small manufacturing sector is almost entirely dependent on agriculture, and the island has built up a handful of successful industries specializing in soaps and other agricultural by products. The largest manufacturer is Dominica Coconut Products, controlled by Colgate-Palmolive, which produces soap from coconuts.

7. Conducting business in Dominica Setting up and running a business in a new jurisdiction is a challenge but with the right knowledge and support, companies can achieve their goals. Our index focuses on rules, regulations and penalties, accounting and tax, and hiring, firing and paying employees. Setting up a corporate entity is a costly endeavor. Payments are required for the purchase of a company name and publication of said name, incorporation tax, registration with the Chamber of Commerce and registration with the Department of Labour. The process takes 19 days to complete on average. Each jurisdiction has a different complexity profile, presenting specific challenges and opportunities. Find out about: The easiest and most complex countries and why Greece tops the ranking, What your company should consider when operating in these countries, How corporate reporting trends and penalties differ from one jurisdiction to another. Steps required to establish a Business in Dominica: Register with the Dominica Social Security. Obtain Alien Land Holding Licence (if applicable) Obtain Physical Planning Division permission for construction of building (if applicable) Seek permission from other Government Agencies (if applicable).

8. Taxation in Dominica Tax on the Transfer of Industrialized Goods and Services (ITBIS) or Sales tax. The ITBIS is a value-added or sales tax applicable to the transfer and importation of most goods and most services, and currently, the rate of ITBIS is 18%. Residents of Dominica should pay taxes on global income, non- residents pay taxes on profits received from sources within the island. The corporate income tax (CIT) rate is 27%. In addition, the 1% rate assets tax is considered an alternative minimal income tax, payable when the CIT is lower than the assets tax. Dividends/profits remitted abroad or paid locally are subject to a withholding tax (WHT) of 10% as a definitive tax payment. Income tax is calculated based on a progressive scale: first 20 thousand East Caribbean Dollars (XCD) are subject to 15% tax; the next XCD 30,000 – 25%. The tax rate is 15%. No tax is imposed on capital gains and dividends in Dominica. Offshore companies registered in the state receive 20-year tax holidays and do not pay income tax, corporate profits tax, inheritance and wealth taxes. Such companies pay registration fee and government levy which is paid annually.

9. Trade Dominica is the 195th largest export economy in the world. In 2017, Dominica exported $40.5M and imported $275M, resulting in a negative trade balance of $235M. In 2017 the GDP of Dominica was $496M and its GDP per capita was $10k. The top exports of Dominica are Passenger and Cargo Ships ($12.9M), Cocoa Beans ($3.08M), Raw Tobacco ($2.77M), Medical Instruments ($1.94M) and Other Paints ($1.31M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Petroleum Gas ($48.8M), Refined Petroleum ($48.5M), Delivery Trucks ($23.1M), Cars ($13.9M) and Poultry Meat($5.45M). The top export destinations of Dominica are Indonesia ($12.9M), the Netherlands ($2.94M), Sri Lanka ($2.77M), Antigua and Barbuda ($1.74M) and Jordan ($1.55M). The top import origins are the United States ($131M), China ($33.7M), Mexico ($30.4M), the United Kingdom ($10.6M) and Saint Vincent and the Grenadines ($5.79M).

10. Banking in Dominica There are three international banks which operate branches in Dominica, namely – Royal Bank of Canada, Bank of Nova Scotia, and First Caribbean International. One indigenous bank National Bank of Dominica Ltd., and one development bank the Agricultural, Industrial, and Development Bank (AID) are also in operation. The World Bank’s Board approved two emergency support operations totaling US$65 million for restoring agriculture livelihoods, strengthening resilience, and rebuilding houses destroyed by Hurricane Maria. This represents the World Bank’s highest ever financing for Dominica and was part of a larger US$115 million package of support that included financing of US$65 million in concessional terms and US$50 million in grant financing from the International Development Association's (IDA) Crisis Response Window. In the Caribbean, many financial tools developed by the World Bank are being used to get quick access to finances for reconstruction.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

12. Looking to Buy or Sell a Business? CONTACT US NOW FOR A FREE BUSINESS VALUATION WWW.MERGERSCORP.COM

13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com