Turks and Caicos Islands
The Turks and Caicos are currently revising its legislation according to recommendations made in a review commissioned by the UK. In 2002 the Turks and Caicos signed a letter of commitment that agreed to establish a system that would exchange information on tax matters with member countries of the Organisation for Economic Co-operation and Development (OECD). In 2003, the exchange of information on criminal tax matters was applied, whiled further information exchange for civil matters will be applied in December 2005. The Turks and Caicos are committed to ensuring that all beneficial owners of registered entities and accounts are known to regulators. The Turks and Caicos did not appear on the Financial Action Task Force’s blacklist on jurisdiction’s deemed to be ‘non-cooperative’ in battling money laundering.
The Financial Services Commission (FSC) is responsible for licensing and supervising all finance-related entities along with providing a centralized service for registering companies, trademarks, and patents. The Turks and Caicos Islands Investment Agency (TCInvest) is a government-owned but privately operated one-stop agency that advises investors, screens projects for feasibility and conducts background checks on the character and financial capabilities of sponsors.
The Companies Ordinance Ordinance of 1981, along with related legislation, allows registration of ordinary companies, exempted companies, limited liability companies, exempted limited liability companies, non-profit organizations, limited life companies, partnerships, trusts, insurance companies, and mutual funds. Ordinary companies are registered to carry on local businesses and hold real estate while exempted companies are not allowed to conduct business within the jurisdiction. Ordinary companies are required to obtain a business license in order to operate within the Turks and Caicos. Once granted, the business license is valid indefinitely as long as the annual renewal fee is paid. Exempted companies are not required to obtain a business license and are subjected to minimal disclosure and administrative requirements. In order to establish an exempted company, three copies of the memorandum and articles of association must be lodged with the Registrar of Companies along with a signed declaration that affirms that the business will be carried out outside the jurisdiction. Details of authorized capital must be given. The application must be made through a licensed agent, and the company must nominate a resident representative in the Turks and Caicos Islands. There is no requirement to file details of shareholders or directors.
An exempted company may be registered as a limited life company. According to TCIvest, limited life companies are intended to resemble a US limited liability company designed to achieve advantageous tax treatment by the IRS based upon the fact that they flow through vehicles for US taxation and therefore taxed on a basis similar to a partnership. The Companies Ordinance requires that a limited life company must have two members and its duration must be limited by the memorandum of association. Partnerships may be registered as limited partnerships or exempt limited partnerships. A partner may be an individual, a company or a partnership in itself. One general partner must be either a resident or incorporated in the jurisdiction.
The Limited Partnerships Ordinance 1992 allows registration of firms made up of one general and one or more limited partners, not to exceed 100 in all. A general partner is one who participates in the management of the firm and is liable for its debts, while a limited partner is one who contributes capital to the firm upon entering the partnership and, unless otherwise specified, is not liable for the firm’s debts beyond the amount contributed. A limited partner may not participate in the management of the firm or will lose exemption from liability. A general partner may also have an interest as a limited partner.
Two types of banking licenses are available under the Banking Ordinance 1979 as amended. A national banking license allows a bank to conduct local business. An overseas banking license restricts activities outside of the jurisdiction. A combined national and overseas license can also be issued. Under the Trusts Ordinance, a trust may be established either through a deed of settlement or by a deed of declaration of trust. The Trustees (Licensing) Ordinance regulates trust companies and other professional trustees.
The Turks and Caicos do not impose exchange controls on the movement of funds into or out of the jurisdiction. Accounts may be held in any currency. Work permits are given for one year and can be renewed annually. In order to attract investors, the government awards permanent resident certificates. These certificates give applicants the same rights of a citizen of the Turks and Caicos citizen except the right to vote.
Companies exempted automatically receive an undertaking guaranteeing exemption from taxation for 20 years. The exemption applies to any tax or duty levied on profits, gains, income, or appreciations. The undertaking also states that taxes or any tax in the nature of estate duty or inheritance tax shall not be payable on the shares, debentures, or obligations of the company.
Limited partnerships exempted may secure a 50-year exemption from any tax on gains levied in the jurisdiction. The jurisdiction does not have any income taxes, corporate taxes, property taxes, capital gains taxes, inheritance or estate taxes. Chief revenue sources of the government customs and stamp duty, the bulk of the latter coming from real estate transactions. The majority of imports are taxed at 33%. Stamp duty on land purchases is 6.25% on transactions up to US$75,000 and 9.75% on transactions over US$75,000. Revenues are derived from other indirect taxes such as accommodation tax payable on hotel rooms, work permit fees, and fees generated by the offshore industry.