TURKS AND CAICOS: COUNTRY AND FOREIGN INVESTMENT REGIME

Turks and Caicos Population, Language and Culture

The islands were discovered in the 15th century by Juan Ponce de Leon, a Spanish explorer, but remained uninhabited until 1768 when Bermudians arrived and established a salt panning industry. From 1874 to 1959 the islands were a Jamaican dependency. In 1962 when Jamaica became independent the islands became a British crown colony.

The official and spoken language is English. In July 2007 the population was estimated at just under 21,750 and is largely of black origin. The indigenous population are known as "Belongers". The culture is Afro-Caribbean. In recent years there has been a substantial amount of immigration from other, less successful parts of the Caribbean.

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Turks and Caicos Government

The Turks and Caicos were historically linked to Jamaica and the Bahamas. When Jamaica achieved independence in 1962 the islands shared a governor with the Bahamas .When the Bahamas became independent in 1973 the islands became a British crown colony with their own Governor. The islands are now a self-governing dependent territory of the United Kingdom. The Queen is the head of state and appoints and is represented by a Governor. The constitution of 1975 provided for a ministerial form of Government with substantial internal autonomy. The constitution of 1988 consolidated internal self-rule. Further changes to the constitution in 2006 assigned to Ministers of Government responsibility for the conduct of business in the House of Assembly in respect to: External Affairs; Defence and Internal Security, including the Police Force; and the Regulation of International Financial Services. The new Constitution also makes provision for the establishment of an Advisory National Security Council. This panel consists of: the Governor, the Premier, the Attorney General, the Deputy Premier, and the Minister of Immigration. The purpose of the Council is to make recommendations to the Governor on matters relating to defence, external affairs, the regulation of international financial services, internal security. The Council is also equipped to make recommendations on the exercise of the Governor's functions during a period of public emergency.

Legislative and executive powers are divided between the legislative council, the executive council and the Governor. The legislative council consists of 21 seats of which 15 are popularly elected; members serve four-year terms. The Chief Minister is selected by a majority of the elected members of the legislative council. The executive council functions as a cabinet. It consists of the Chief Minister, six ministers (who are appointed from among the elected members by the Governor on the advice of the Chief Minister) the Chief Secretary, the Attorney General, and the Governor who presides.

The Turks and Caicos Islands are politically and economically stable and there does not appear to be any movement agitating for independence from Britain, although Chief Minister Michael Misick said in April 2006 that independence is a long-term goal of his Progressive National Party.

Elections in the fall of 2003 saw the PNP take power from the People's Democratic Movement, which had governed for the previous eight years. Misick's PNP managed to obtain power by winning two by-elections earlier in the month which gave it eight seats in the 13 seat Legislative-Council.

The Turks and Caicos Islands have a sound legal system relevant to the needs of the jurisdiction. Laws comprise locally enacted statutes (known as Ordinances), English statutes specifically extended to the islands, and where applicable, English common law. The court system consists of a Magistrates Court and a Supreme Court. Practice and procedure are based on English law. Appeal lies to the Court of Appeal and ultimate appeal is to the Privy Council sitting in London.

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Turks and Caicos Economy and Currency

The three pillars of the economy are tourism, fishing and financial services.

Pristine beaches, excellent diving and the islands' location just 90 minutes flying time from Miami have helped the development of the tourist industry. Numbers doubled to over 100,000 between 1990 and 1997 with Americans accounting for more than half of these visitors. The islands appear well positioned for further growth of this sector of the economy with generous incentives offered by the Government through its development agency TCInvest (see below). Tourist arrivals fell by 6% in 2002 in the wake of 9/11, but had recovered somewhat by 2003.

There is a small fishing industry based around the export of lobsters and cray fish to the United States.

The introduction of the Companies Ordinance 1981 is widely credited with having kick-started the development of the financial services sector. In 1989 the industry took on a more formal structure with the creation of the Financial Services Commission designed to regulate and supervise all financial services activities. The Commission is headed up by the Financial Services Commissioner who is appointed by and answerable to the British Governor. Representing 7% of the economy, the offshore financial services sector ranks behind tourism as the main source of income in the Turks and Caicos Islands. However, the sector remains one of the key elements of the islands economy providing employment in the public and private sectors.

Due to lack of employment opportunities in the 1960s and 1970s many citizens (known locally as "Belongers") emigrated to the United States and Bahamas in search of work. However due to the growth in tourism and financial services the situation has now reversed itself with "Belongers" returning and immigrants from Haiti and the Dominican Republic providing most of the unskilled labour.

Most food and nearly all capital and consumption goods are imported. Since there are virtually no taxes payable in the islands the major sources of Government revenue include fees from offshore financial services and customs receipts on imported goods.

The Islands' currency is the US dollar.

The Turks and Caicos Islands recent economic success is evidenced by the fact that they no longer receive direct grant aid from the United Kingdom. Economic growth has been satisfactory in recent years.

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Turks and Caicos Entry and Residence

The Government is keen to encourage inward investment and this is reflected in its immigration policy. The immigration authorities welcome qualified persons wishing to establish business enterprises or undertake employment in the islands and as such it is relatively easy to obtain a work permit. However the policy of Government is to promote the employment of local islanders as much as possible and to this end a list of reserved activities has been published to ensure the hiring of Belongers.

The right to reside and work in the islands can be obtained by:

Work permits are granted for up to 3 years at a time and are given to those applicants who can establish that they meet the Government's good health and good character requirements, are capable of financially maintaining themselves and their dependants throughout the duration of their stay on the Islands and who have available for their use a house or apartment. There is an annual fee of $2,000.

A Permanent Residence Certificate remains valid for the lifetime of the holder, but it can be revoked in certain circumstances. To obtain a certificate an applicant must satisfy the Government he intends to make the Turks and Caicos Islands his principal home, that he is of good character & good health and that he has invested or will invest more than $250,000 in a business or home on Providenciales ($125,000 on one of the other islands). A skilled worker who has held a work permit for not less than 5 years can obtain a certificate based on lower investment levels ($100,000 and $75,000).

To apply for citizenship one must have held a Permanent Residence Certificate for at least 12 months and have been resident in the Islands for at least 5 years. It is unlikely such status will be granted to large numbers of persons primarily because of the very real concerns of the indigenous population that they may become a minority in their own country.

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Turks and Caicos Business Enviroment

The depth of the professional infrastructure servicing the financial services industry is impressive. A wealth of talented Canadian and English barristers are present in addition to lawyers licensed in Hong Kong, USA, the Bahamas and the Cayman Islands. A number of major accountancy firms also have a presence. Telecommunications are excellent.

Under the Business Licensing Ordinance 1983 all Turks and Caicos businesses, whether incorporated or not, require licenses. License fees vary quite widely according to the circumstances, and range from nil (agriculture and apartment rental not exceeding four units) to as high as $10,000 per annum (hotel accommodation with 100 bedrooms or more). Fee levels are set annually in the Islands' budget.

An individual who wishes to work on his own account and who does not have a Permanent Residence Certificate must in addition to obtaining an annual work permit obtain a business licence under the Business Licensing Ordinance 1983. Business licences will usually be granted to individuals who demonstrate the necessary qualifications and credentials provided that the business concerned is not in a category restricted to the indigenous population. Examples of restricted business sectors include accountancy, apartment rentals and management, real estate agency, archtitecture and contracting, among other categories. Business licences are normally indefinite in duration.

Banking confidentiality and secrecy are governed by the Confidential Relationships Ordinance 1979 which provides for penalties and terms of imprisonment for professionals, including government officials, who make unauthorised disclosure of confidential information. The Companies Ordinance 1981 contains similar provisions in relation to exempted companies. Additionally the common law also imposes civil liability for breaches of professional privilege.

The duty to maintain confidentiality does not apply where it conflicts with the provisions of the Mutual Legal Assistance (USA) Ordinance 1991 which was passed to give effect to the treaty made between the United States and the United Kingdom to give assistance in criminal matters. However, this treaty does not extend to fiscal crime; the Islands have not entered into any double taxation treaties and there is therefore no scope for the local authorities to co-operate with requests by foreign investigators for assistance in investigating tax evasion.

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Turks and Caicos Investment Incentive Schemes

In 1994 the government set up the Turks and Caicos Investment Agency ("TCInvest") to encourage sustainable economic growth by attracting new offshore investment and by encouraging entrepreneurial spirit among the local population.

The Government has streamlined the business licensing system, designed a responsive immigration policy, extended a variety of duty exemptions and agreed in specified circumstances to provide access to crown land under long term leases at reasonable rents. TCInvest also provides debt financing to suitable Belonger controlled projects, identifies and promotes investment opportunities on the Islands, provides advice and assistance to the Government on investment policies and negotiates joint ventures and agreements with investors wishing to access the Government's investment incentives.

In order to encourage the development of tourist and leisure facilities the Government may on the recommendation of TC Invest grant both long term concessionary leases or conditional purchase leases over government land together with a variety of customs duty exemptions lasting 35 years.

In 1972 the islands enacted the Encouragement of Development Ordinance whereby approved development projects are granted relief from import duties and possible future taxes for a period of up to 35 years. The benefits under this Ordinance may apply to expansion as well as to the original establishment of development enterprises. Similar incentives apply to developments carried out by locals or foreigners on Crown land provided the developments are not for private residences. In such cases Crown lands can be acquired on long term concessionaire leases or in special circumstances on a conditional purchase lease provided the developer completes the agreed improvements and meets other conditions within the option period.

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