Cook
Islands Executive Summary
The Cook Islands are a self-governing parliamentary
democracy in a loose constitutional association
with New Zealand. The Queen is Head of State and
New Zealand has a High Commissioner. There is
a Prime Minister and a cabinet appointed from
among elected members of parliament. The population
of 21,923 (2008), ethnically similar to New Zealand
Maoris, occupies widely scattered islands in the
South Pacific half way between New Zealand and
Hawaii. The time zone is 10 hours behind GMT.
The capital, Avarua, on Raratonga Island, has
direct flights to Los Angeles, Hawaii, New Zealand
etc. The climate is tropical and there are typhoons
in summer.
The
economy is import dependent and loose fiscal policies
led to 'bankruptcy' in 1996. Some recovery has
followed Government cut-backs and assistance from
New Zealand. Exports include copra, pearls and
fruit. The tourist industry is vital, and the
offshore sector is the second biggest source of
government revenue. The currency is the New Zealand
dollar. There are no exchange controls. Unemployment
and inflation are low. There are significant investment
incentives available to foreign-owned businesses.
The law is based on English common law.
Local
taxation consists of a 20% corporation tax, and
personal income tax at rates up to 30%. There
is VAT of 12.5% and there is Stamp Duty. Withholding
tax on domestic payments is 5%, and 15% on payments
to non-residents. The Cook Islands have no double
taxation treaties.
The
offshore sector began quite early in 1981 and
there are special regimes for banks, captives
and trust management, which is the biggest offshore
sector. Offshore companies and trusts do not pay
any taxes except for Stamp Duty. Confidentiality
is tight, except in cases of criminal activity,
which does not include fiscal crime.
FATF
Blacklist
In
June 2000, the Cook Islands was blacklisted by
the FATF as a non-cooperative and harmful tax
haven.
In September 2000 the Cook Islands parliament
passed the Money Laundering Prevention Act, which
provides for the setting up of a Money Laundering
Authority, to consist of the government's financial
secretary, the commissioner for offshore financial
services and the commissioner of police.
In
2003 a series of nine new measures were introduced
in the Cook Islands Parliament over the regulation
of domestic and offshore financial industries
after the cabinet approved the work of an Anti-Money
Laundering/Counter Financing Terrorism Committee.
The measures include a Financial Transactions
Reporting Act, which will require all banks to
report local and international money transfers
to a central financial intelligence unit.
The
Cook Islands were removed from the FATF's list
of NCCTs in February 2005. The FATF said that
a recent visit had confirmed that the jurisdiction
was effectively implementing anti-money laundering
(AML) measures.
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