Turks and Caicos: Domestic Taxation
Domestic Corporate Taxation
In the Turks & Caicos Islands (TCI) there are no taxes impacting on business other than import duties (at varying rates), and stamp duty on official documents and on transfers of real estate. See Types of Company for details of annual fees payable by companies, and Offshore Legal and Tax Regimes for details of fees payable by various types of financial institution.
The government has assured that there are no plans to introduce an income tax, despite the emergence of a substantial revenue shortfall following the financial crisis. Instead, the interim government planned to plug the fiscal gap by introducing a value-added tax (probably at 10%) from 2013. However, both major political parties votes in February, 2013, to repeal the Value Added Tax Act. Other initiatives announced in the 2011/12 Budget included the introduction of an immediate 4% Customs Processing Fee, to be levied on all imported goods and importers; and, from September 1, 2011: a new carbon tax on electricity generators; a water sales tax on commercial customers and large residential customers; a 10% bank tax on non interest-bearing services provided by banks (replacing money transfer fees and stamp duty); and a 2.5% insurance tax on gross premiums for general insurance (excluding life and health premiums).
In February, 2004, the Chief Minister of the Turks and Caicos Islands, Michael Misick, announced that the jurisdiction had committed itself to implementing the European Union's Savings Tax Directive, subject to the creation of a level playing field on the issue for all offshore and onshore jurisdictions. He said: "The Government's policy is that it will comply with Article 17 (2) (ii) of the Directive and will apply a withholding tax during the transitional period on the same terms and the same conditions that apply to the Swiss Confederation, the Principality of Liechtenstein, the Republic of San Marino, the Principality of Monaco and the Principality of Andorra and in accordance with an agreement in substantially the same terms entered into by them with the European Community concerning the EU Council Directive on taxation of savings income in the form of interest payments."
The Directive came into effect on 1st July, 2005, but the TCI said that it anticipated very little reduction in business in the islands since the Directive is applicable to individuals and not to corporate entities. Investments can be moved into corporate entities and investors have been advised to structure their operations to form corporate entities in the medium to long term.