The Turks & Caicos Islands (TCI) are a British Dependent Territory under the overall jurisdiction of the British Government. The Islands have adopted a ministerial form of government with substantial internal self-government. The Islands are located some 520 miles to the South East of Miami, Florida with the seat of government located on Grand Turk.
Legal System
The substantive law of the Islands is based on English common law as modified and supplemented by local ordinances and supplementary legislation. Overall there is a sound legal system relevant to the needs of the jurisdiction. The court system consists of a Magistrate's court and Supreme Court. Practice and procedures are based upon English law. Appeal lies to the Court of Appeal which visits the Islands and ultimate appeal is to the Privy Council in London.
Currency
In 1973 the United States Dollar replaced the Jamaican dollar as the official currency. There is therefore no exchange control and no disclosure to any exchange control authority. Bank accounts can be kept in any currency and there is no restriction on the inward and outward movement of funds.
Taxation
TCI has no income tax on persons, companies or other entities. There are no capital gains, inheritance or estate taxes. TCI is not a party to any tax treaties.
Confidentiality
The Confidential Relationships Ordinance 1979 provides for penalties and imprisonment for professionals making unauthorised disclosure of confidential information. The Companies Ordinance 1981 reinforces the confidentiality aspects in respect to exempted companies (IBCs).
Investment and Immigration
There is generally little difficulty in obtaining the necessary work permits for persons who are qualified and wish to establish an enterprise or to take up employment in the Islands. Every business requires a business licence and some activities are reserved to Islanders (Belongers). Permanent residency is available for different activities and different levels of investment.
The Government recently reduced investment level criteria for those wishing to apply for residence in islands other than Providenciales. Investors in certain approved higher risk investments may also apply to obtain permanent residency. The recent establishment of the Turks & Caicos Islands Investment Agency (TCInvest), a statutory body, allows for clarification, enhancement and facilitation of the inward investment process.
Tourism
The volume of tourism has now become significant and is increasing in line with the growing number of flights to the Islands and the number of hotels now available, including Club Med's premier resort in the Caribbean. American Airlines currently fly twice a day from Miami to Providenciales. This is supplemented by a growing number of charter services, particularly from North America. The Islands rank amongst the top places in the world for the quality of beaches and for scuba diving.
Offshore Financial Services
Since 1981, when TCI enacted a comprehensive new Companies Ordinance, official policy has been to establish the TCI as a major offshore centre. The regulatory body is the Financial Services Commission, located on Grand Turk. The main areas of activity are as follows:
Companies
At the core of The Companies Ordinance is the exempted company or IBC. The exempted company is an extremely flexible vehicle and incorporators are virtually unrestricted in defining capital structure and the rights and liabilities of members. For example, members can be limited by shares, limited by guarantee or maintain unlimited liability or a combination of each. The main restriction of the exempted company is that it is not allowed to conduct business in the Islands. This is reserved for ordinary companies, which are usually used to hold assets, such as land in the Islands. In addition, the Companies Ordinance also features the Limited Life Company or LLC to meet growing demand, particularly in the USA. The LLC is designed to enjoy the benefits of a partnership so that for income tax purposes profits (and losses) are treated as attributable to the members of the company rather than to the company itself. At the same time the members enjoy the limited liability of a corporate entity. Incorporation procedure for a TCI company is easy and quick, usually taking less than 24 hours. The Memorandum of Association, together with the Articles of Association, need to be filed through a local agent with the Registrar and the incorporation fee paid. The Registrar issues a certificate of incorporation and the company is then in existence. One unusual feature of the 1981 Companies Ordinance is that a company incorporated elsewhere may move its domicile to TCI. Likewise, a company incorporated in TCI is free to move its domicile elsewhere subject to satisfying the Registrar.
Banking
Barclays Bank and Bank of Nova Scotia have branch offices in the Islands. Several other banking institutions are incorporated with national or overseas banking licences. Bank deposits have shown a growth of over 40 percent in the last 12 months, reflecting recent strong growth in TCI's economy.
Trusts and Trust Companies
TCI's trust laws derive from the Trust Ordinance 1990. It has many innovative features and can be used to great advantage in personal and business tax planning. In relation to asset protection the current law provides that a settlement into a trust cannot be set aside unless the creditor can show that the settlor was insolvent or became insolvent at the time of the settlement of the trust. Legislation on Asset Protection Trusts is currently under review. Trusts are administered by trust companies and professional trustees. In TCI these latter are required to be licensed under The Trustees (Licensing) Ordinance and Regulations 1992. There are two categories of licence: a Restricted Trustee Licence which requires the licensed trustee to name the trust or trusts and an Unrestricted Trustee Licence which has no such restriction.
Insurance
The licensing of insurance companies, as well as of insurance managers, brokers and agents, is covered by the Insurance Ordinance 1989 and the Insurance Regulations 1990. A particular feature of the legislation permits lower cost use of pure captives and specialist insurance companies serving niche markets. One such niche is the producer-owned reinsurance company, which is exempted under Section 7(1 1) of the Ordinance from certain reporting functions and is subject to reduced licensing fees. By the end of 1996 TCI had issued 2,034 insurance licences.
Collective Investment Schemes
Collective investment schemes may be created in TCI either by incorporating a mutual fund company or establishing a trust. The former are governed by the provisions of the Companies Ordinance, while the latter are governed by the general laws of equity and trusts. Currently, there are no rules defining who may act as a manager of a fund or regarding fund ownership, capital requirements or types of investments. Rather the emphasis is on demonstrating the manager's expertise in the area of investment selected. All funds and schemes are required to be approved by the Financial Services Commission. Stand alone Mutual Funds legislation in TCI is currently under discussion.
New Legislation
The following legislation is either currently under discussion or is shortly to be passed:
- Registration of Company Charges
- Voidable Dispositions
- Mutual Funds
- Licensing of Company Managers
- Regulatory Co-operation
- Registration of Trade Mark Services
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.