TURKS AND CAICOS: OFFSHORE LEGAL AND TAX REGIME

The Turks & Caicos Islands Government has constructed a regulatory regime that is highly favourable to offshore operations, especially since there is no taxation other than stamp duty and import duties (see Direct Corporate Taxation). There are more than 15,000 companies registered in the Islands, including 13,000 International Business Companies. See Law of Offshore for a detailed treatment of the legal regimes for Banking, Insurance and Trust Management. In this section offshore corporate forms are summarised, along with details of the fees payable by the various types of financial institution.

Chief Minister of the Turks and Caicos Islands, Michael Misick, announced in 2003 that the jurisdiction had committed 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.

Mr Misick said: "The Government of the Turks and Caicos Islands in recognising its relationship with the United Kingdom and in the spirit of co-operation and partnership and in a desire to foster the development of standards in matters of international finance has decided to implement legislation to introduce the provisions of the EU Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments."

However, he went on to add that: "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 Lichtenstein, 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 says it anticipates 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.

Turks and Caicos Forms of Offshore Operation

Offshore entities may take the following forms (click on a form for a description of the legal regime under which it is constituted):

Banks, insurance companies, mutual funds, trust management companies and other financial institutions use an appropriate corporate form from the above list; in addition they are subject to registration or licensing as described in Offshore Business Sectors.

Exempted companies and exempted limited partnerships receive a statutory guarantee on formation against the imposition of any taxes for a 20-year period.

• National Banking License: initial fee $15,000; annual renewal fee $10,000;
  
• Overseas Banking License: initial fee $10,000; annual renewal fee $7,500;
• Combined License: initial fee $20,000; annual renewal fee $17,000.

• Domestic insurer: $2,500;
• Captive insurer: $2,000;
• Credit Life Reinsurer: nil;.
• Other insurer: $500;
• Broker: $1,000
• Manager: $3,500;
• Principal Representative: $1,000;
• Agent: $100.

• Unrestricted License: application fee $500; annual fee $3,000;
• Restricted license: application fee $200; annual fee $750.