Turks and Caicos are two island groups located in the North Atlantic Ocean, south-east of the Bahamas and north of Haiti. The total land area is 430 sq. km., population amounts to 19,350 (July 2003 est.). The capital and financial centre of the Turks & Caicos Islands is Cockburn Town on the main island of Grand Turk. The official language of the islands is English, the literacy factor is 98%.
The islands were part of the UK's Jamaican colony until 1962, when, upon Jamaica's independence, they assumed the status of a separate crown colony. The governor of the Bahamas oversaw affairs of the Turks and Caicos from 1965 to 1973. With Bahamian independence, the islands received a separate governor in 1973. Currently the islands enjoy the British overseas territory status.
The political system of the Turks and Caicos Islands is based on the British Westminster Model with Queen Elizabeth II as titular Head of State, represented in the islands by a Governor (appointed by the monarch). Executive authority is exercised by the Executive Council under the leadership of the Chief Minister. The Chief Minister is appointed by the Governor and is the leader of the majority party. Executive Council consists of three ex officio members (Executive Secretary, Minister of Justice and Minister of Finance) and five members appointed by the governor from among the members of the Legislative Council. The legal power is vested in the unicameral Legislative Council (19 seats of which 13 are popularly elected, three are appointed by the Governor and other three are ex officio members being the Executive Secretary, Minister of Justice and Minister of Finance; members serve four-year terms). The judicial power is represented by the Supreme Court.
The Turks and Caicos economy is based on tourism, fishing and offshore financial services. Most capital goods and food for domestic consumption are imported. Government revenue comes mainly from import duties, stamp duties and business licenses; there are also some taxes on tourism. The official currency of the Turks and Caicos is US Dollar.
Legal system of the TCI is based on the laws of England and Wales, with a few adopted from Jamaica and the Bahamas. The keystone of the financial service legislation is Companies Ordinance 1981. Other principal corporate legislation includes Banking Ordinance 1979, Insurance Ordinance 1989, Mutual Funds Ordinance 1998 and Trust Ordinance 1990.
In response to pressure from the OECD and the FATF, as well as the UK government, the Financial Services Commission arranged passing of the Proceeds of Crime Ordinance in 1998 and the Proceeds of Crime (Money Laundering) Regulations 2000; as a result the Turks & Caicos did not appear on the FATF's money-laundering 'black-list' and OECD list of uncooperative tax heavens.
The Companies Ordinance 1981 provides for registration of Ordinary companies, Exempted companies (or IBC), Limited Life Companies, Foreign companies and Non-profit organisations.
The type of company for international trade and investment is Exempted Company. Exepted companies may be formed for any legal purpose including financing, leasing, investment holding, trading, shipping, patent and trademark holding, but they may carry on business only outside the Islands.
Furthermore, licenses are required in order to undertake the following: a) banking or trust business; b) insurance or re-insurance business agency or brokerage; c) registered agent or company management; d) mutual fund activities or e) mutual fund management or administration. Government department responsible for these industries is the Financial Services Commission which also supervises the Registry of companies and the Registry of trademarks and patents.
Exempted companies are typically limited by shares, however, they may be limited by guarantee (i.e. not having a share capital) or incorporated in a hybrid form (i.e. limited by guarantee and having a share capital).
Neither individuals nor corporations operating in and from the Islands are subject to income tax, corporation tax, capital gains tax, value-added tax, estate or legacy duties, inheritance or gift taxes, sales tax or property tax. Upon application to his Excellency the Governor, all Exempted companies may obtain a certificate issued in the name of the Governor which guarantees that the company will be exempt from all forms of taxation, both in respect of its own operations and on the shares in the company, and from any increase in government annual fees for a period of 20 years from its date of incorporation.
To incorporate an Exempted company, a Memorandum and Articles of Association of the proposed company must be signed by one or more natural or juridical persons, acting as Subscribers, and submitted to the Registry of Companies.
The Memorandum establishes the basic structure of the company including the name, the purposes for which the company is formed, authorized capital, details on the shares which may be issued including their par value, denomination, classes and the rights attached, and any other matters which affect the basic existence of the company.
The Articles of Association are essentially the by-laws of the company which govern relations between the various members of the company. They deal with the procedures for calling meetings of shareholders, passing resolutions and transferring shares including any restrictions which may apply.
Once the original M&AA are filed and the proper fees paid, the Registrar of Companies will issue a Certificate of Incorporation, which specifies the name of the company, the date on which it was incorporated, and its registration number. The Certificate of Incorporation constitutes evidence of the company's legal existence. Subscribers also lodge at the Companies Registry a signed declaration stating that the business of the company will be carried on outside the TCI.
The name of the company may be in any language and need not end in the word "Limited" or its equivalent to denote limited liability. The following words: Assurance, Bank, Building Society, Chamber of Commerce, Commonwealth, Co-operative Society, Fidelity, Friendly Society, Guarantee, Indemnity, Insurance, Re-insurance, Trust, Trustee, Underwriter, Royal, Imperial, Empire, Municipal and Chartered or any derivatives of these words cannot be used without the written consent of the Financial Secretary.
The fee to incorporate a company with a capital up to USD 5,000 is USD 100. All companies must have a registered office and a registered agent within the Islands.
In the Turks and CaIcos Islands there is no minimum share capital requirement and no requirement to have the capital paid up. Normally companies are incorporated with the share capital of USD 5,000 which ensures payment of the minimum registration and annual fees. Shares in an Exempt company may be divided into such number of classes and series as the directors may determine by their resolution. Shares may be issued as registered or bearer, shares with or without par value, preference shares, redeemable shares and shares with or without voting rights. Bearer shares can only be issued against fully paid-in capital and only to persons resident outside the Turks and Caicos Islands. Certificates for bearer shares must be deposited with the company manager or resident agent.
An Exempted company may have one or more shareholders, individuals or corporations of any nationality or residence. Shareholders need not disclose their identity to the Registrar of Companies. However a copy of the register of shareholders must be kept at the registered office address in the Turks and Caicos Islands.
Day to day management of companies incorporated in the Turks and Caicos Island is undertaken by the directors. Initial Directors are elected by the subscribers to the Memorandum and Articles of Association, and thereafter these are elected by the shareholders or directors.
The minimum number of directors is one. Directors may be natural persons or bodies corporate of any nationality and need not reside in the Turks and Caicos Islands. Directors need not disclose their identity to the Registrar of Companies, but a copy of the register of directors must be kept at the registered office address in the Turks and Caicos.
Companies incorporated in the Turks and Caicos Islands are not required to file any financial reports or tax returns in the Turks and Caicos Islands. However every company is required to keep financial records reflecting the financial position of the company. Books of account can be kept in any manner in any part of the world.
In January of each year every company must file a short statement indicating that it has traded outside the islands and that the company has complied with the provisions of the Companies Ordinance, 1981. Annual filing fee to accompany this annual return is $300.
Shareholders and directors need not hold any annual meetings, but if they do, such meetings may be held in any country and they may attend such meetings by proxy. Resolutions and minutes may be effected by faxed signature without the need for actual meetings.
No public record is maintained as to the identity of shareholders or directors of the companies incorporated in the Turks and Caicos Islands. Public records of exempted companies consist only of the Certificate of Incorporation, Memorandum and Articles of Association, name and address of the registered agent and the record of payments of the annual fees. It should be noted that Registers of Shareholders and Directors are required to be maintained at the registered office of the company. These records are confidential and not a matter of public record. The Islands have no double taxation agreements with any antion, thus no exchange of tax information is provided by the Turk and Caicos government.
Limited Life Companies afford limited liability to its members and at the same time are treated as partnerships in certain countries for tax purposes. The legislation was drafted primarily to comply with the United States Internal Revenue Service criteria for treating the entity as a partnership for tax purposes meaning that profits and losses are treated as attributable to the shareholders rather than the company itself.
Pursuant to the Companies Ordinance 1981 any LLC must include the words "Limited Life Company" or ‘LLC’ at the end of its name and have at least two members. Memorandum of Association of a Limited Life Company must limit its duration.
Ordinary companies are used for carrying on business and holding land and assets within the islands. They are required by law to obtain a Business Licence and must include the word “Limited” in its name. For public record purposes the Ordinary company must file an annual return with the names, addresses and occupations of shareholders and directors. The fee to incorporate a company with capital up to USD 50,000 is USD 275.
Foreign company is a company incorporated in a foreign jurisdiction that wishes to carry on business or hold land in the Turks and Caicos. Its status is similar to that of the Ordinary Company.
Non-Profit Organizations are used for such bodies as clubs, charitable organizations and professional associations.
The insurance industry in the Turks and Caicos Islands is governed by the Insurance Ordinance 1989 and the Insurance Regulations 1990. Under these laws the following types of licences are available:
- Domestic insurer license (annual fee is $2,500);
- Captive insurer license (annual fee is $2,000);
- Broker license (annual fee of $1,000);
- Insurance companies manager (annual - $3,500).
A typical captive insurance company is a wholly owned subsidiary of an industrial, commercial or government organisation which exists to insure all, or a selection of, the risks of that organisation and its affiliates. Captives may be owned by one organisation (a single parent captive) or by a number of different bodies (group or association captives).
In order to obtain a license for captive insurance the applicant must submit detailed biographical affidavits on the beneficial owners, directors and management of the proposed company, relevant business plan and business references.
Under the Banking Ordinance 1979 and the Banking (Amendment) Ordinance 1989 two types of banking licenses are available:
- National Banking Licence: This licence is granted for banking activities to be carried out locally with islanders and other residents and will only be granted to the branches or subsidiaries of banks which have an established track record and which are subject to effective consolidated supervision by their home supervisory authority. Initial licence fee equals USD 15,000; annual renewal fee is USD 10,000;
- Overseas Banking Licence: This licence is granted for banking activities which are to be carried on outside the Turks and Caicos Islands. The holder of such a licence cannot accept deposits from or lend to residents of the Islands. An application for such a licence will only be considered from branches or subsidiaries of established banks or those closely associated with an overseas bank, as well as from wholly owned subsidiaries of major corporations where the objective of the subsidiary is to undertake in house treasury operations. Initial licence fee equals USD 10,000; annual renewal fee is USD 7,500
It is also possible to have a combined National and Overseas Licence. Initial licence fee equals USD 20,000; annual renewal fee is USD 17,000.