Cook Islands Offshore Legal and Tax Regime

Click on the appropriate form for details of its legal basis in Forms of Company.

Cook Islands Inclusion on FATF Blacklist

In common with many other offshore jurisdictions, the Cook Islands has responded to pressure from the OECD and FATF by tightening up its regulatory regime. Specifically, the Cook Islands has responded to its inclusion on the FATF blacklist of jurisdictions with weak anti-money laundering legislation. In September 2000 the Cook Islands parliament passed the Money Laundering Prevention Act, which provided 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 included a Financial Transactions Reporting Act, which required all banks to report local and international money transfers to a central financial intelligence unit. The operators of offshore companies, banks, trust accounts and insurance firms have been required to make full disclosure since June 4 2004 as a result of the new legislation.

The issue of revised FATF regulations in 2004 meant that the 2003 legislation had to be reviewed, including the Financial Transactions Reporting Act 2003, Proceeds of Crime Act 2003, Financial Transactions Reporting (Customer Identification) Regulations 2004, Financial Transactions Reporting (Offering Companies) Regulations 2004, and the International Companies (Evidence of Identity) Regulations 2004.

Following an International Monetary Fund review in 2004, various regulations relating to anti-money laundering legislation were passed.

Following a review undertaken by the Financial Supervisory Commission, amendments were also drafted to the International Trusts Act and the International Partnerships Act. The amending Bills arise from and remove the powers of the Minister of Finance to grant exemptions from those Acts and “soften” the secrecy provisions contained in them.

An IMF assessment report issued in December, 2004, was complimentary; however, the IMF made a number of detailed recommendations for the improvement of training, transparency and supervision of the financial sector.

It was decided at the FATF Plenary XVI on 11 February 2005 that the Cook Islands should be removed from the list of Non-Cooperative Countries and Territories (NCCTs). A recent FATF visit had confirmed that the jurisdiction is effectively implementing anti-money laundering measures.

Cook Islands Tax Treatment of Offshore Operations

Offshore entities, as listed above, are exempt from Cook Islands taxation, except that they pay Stamp Duty. As far as companies are concerned, offshore entities are those which are registered under the International Companies Act 1981-2 (as amended); this therefore includes offshore banking and insurance companies.

Cook Islands Taxation of Foreign Employees of Offshore Operations

There are no special rules applying generally to the foreign or local employees of offshore operations, who will pay tax according to the normal rules if they are resident in the Cook Islands (see Personal Taxation).

Cook Islands Employment and Residence

There are no special privileges for the employees of non-resident or offshore entities. The Entry, Residence and Departure Act 1977 states that anyone other than a Cook Islands citizen or permanent resident who wishes to live and work on the Islands must first obtain a work and residence permit. An application for a work and residence permit can be made online.

A business or employer can apply for a work permit on behalf of an expatriate employee. As a rule, a permit is issued for a year, and is renewable on application by the employer. The work permit is tied to the applicant's employer and is not transferable to another employment.

Under the Leases Restrictions Act 1976 a foreigner may lease land for up to 5 years without obtaining special permission. A foreigner wishing to lease land for more than 5 years needs to obtain the approval of a Government committee set up under the Act. A foreigner cannot lease land for more than 60 years and is forbidden from owing a freehold. A foreigner is defined as anyone who is not a permanent resident or a citizen of the Cook Islands.

In February 2008, the Entry, Residence and Departure Act was amended with regard to the granting of permanent residence .

Under the updated legislation, the granting of up to 650 PR certificates was permitted, 150 more than the previous limit of 500.

The amendment also required applicants not only to be of "good character" but to have a proven record of having made a "significant positive contribution to or investment in the Cook Islands in terms of skills, expertise, community work or financial investment."

There was also a new seperate category allowing unlimited number of PR certificates to be granted to those married to Cook Islanders or PRs, as long as they have been married for no less than five years.

COOK ISLANDS : OFFSHORE LEGAL & TAX REGIMES

On this Page:

Cook Islands Forms of Offshore Operation

Cook Islands Inclusion on FATF Blacklist

Cook Islands Tax Treatment of Offshore Operations

Cook Islands Taxation of Foreign Employees of Offshore Operations

Cook Islands Employment and Residence