Cook Islands: Double Tax Treaties

The Cook Islands has not entered into any Double Tax Treaties but has signed 15 Tax Information Exchange Agreements with other countries. The Islands have passed other laws dealing with provision of information in respect of criminal matters, but the authorities habitually do not respond to requests for information regarding fiscal matters or tax evasion. Legislative changes to implement the exchange of information provisions in the TIEAs has as yet not been passed.

New Zealand and the Cook Islands have signed a Tax Information Exchange Agreement between their two countries as part of international efforts to strengthen cooperation in this area. It was also agreed to establish an annual Joint Ministerial Forum that will further strengthen the special relationship between the Cook Islands and New Zealand.

The Agreement provides for full exchange of information on criminal and civil tax matters between the two countries. New Zealand’s Revenue Minister, Peter Dunne said: "We welcome the signing of this important Agreement with the Cook Islands, with whom we have a close historical, economic and cultural relationship."

"The Agreement will enable the tax authorities of both countries to gain access to information about income and assets that would-be evaders try to hide in the other country,” he continued. "Having access to that information is especially important at a time when countries everywhere are doing all they can to protect their tax bases."

Mr. Dunne said that the Agreement will cover "not only information held by banks and other financial institutions, but also information on who benefits in company ownership chains and on the settlors, trustees and beneficiaries of trusts."

New Zealand’s Prime Minister, John Key, who signed the agreement on behalf of New Zealand, said: “Regular high-level political engagement between our two countries will play an important role in assisting the Cook Islands in developing its economy and also reflects the strong relationship that underpins our partnership.”

Cook Islands Provision of Information

Government officials and the employees of banks, insurance companies, trust & corporate entities are compelled to observe secrecy and failure to do so leading to an unauthorized disclosure will result in penal sanctions.

The general rule prohibiting disclosure is subject to 3 exceptions, namely:

• Under the International Companies Act 1981 the high court on application of an interested party has power to order disclosure of corporate information in a case involving drug trafficking or money laundering. The power to order disclosure does not extend to fiscal crime. Appeal lies to the Islands' Court of Appeal and thereafter to the Privy Council in London.
• Under the Offshore (Criminal Provisions) Act 1996 an officer or employee of a registered trust entity (which incorporates and manages companies and trusts ) who has cause to suspect that a company or trust is involved in drug trafficking or that a person related to or involved with that entity has been convicted of serious criminal activity, must refer the matter to the Government regulatory body. Furthermore the registered trust entity is to provide such reasonable assistance, documentation and other information as may be required by the Government regulatory body under the law. Serious criminal activity is defined as drug trafficking or any other activity whether in the Cook Islands or elsewhere which if committed in the Islands is or would be an offence under the Crimes Act 1969 carrying a maximum penalty of 5 years or more. Information provided in these circumstances does not breach confidentiality provisions of the Cook Islands. Disclosure never extends to fiscal crime.
• The Trustee Companies (Due Diligence) Regulations 1996 require the officers and employees of a registered trust company to take reasonable precautions to ensure that an International Trust is not being used to shelter assets derived from drug smuggling, money laundering or other serious crime and to report any such activity.

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Cook Islands International Agreements

In 2003 a Finance Intelligence Unit was established, which in July 2004 was accepted as a member of the Egmont Group – the internationally recognised body for FIUs.

Under Sections 10 and 11 of the Financial Transactions Reporting Act 2003, a broad range of “financial institutions” are required to submit ML-related reports to the FIU on suspicious transactions and cash and/or electronic transactions above $NZ 10,000 (at the time of entry into force). The FIU has the authority to require reporting parties to supplement reports and has broad powers to obtain relevant information needed to combat ML. The FIU is able to exchange information with counterpart FIUs or like agencies without violation of secrecy provisions.

During the Egmont Group meeting at Guernsey in the English Channel Islands in 2004, the Cook Islands FIU signed a memorandum of understanding with its Australian counterpart, AUSTRAC. The agreement supports the “desire by both parties to facilitate the investigation and prosecution of persons suspected of money laundering and serious crimes in the spirit of cooperation and mutual interest.” The Cook Islands FIU is now working with its Thailand and New Zealand counterparts to sign similar agreements in the near future.

The Cook Island government's description of its Money Laundering Prevention Act 2000 is available in Tax-News Resources at: http://www.tax-news.com/asp/res/jcimoney.html

In October 2007, it was announced that the European Commission had signed Country Strategy Papers with 13 Pacific States at the 38th Pacific Island Forum in Tonga.

The states in question (the Cook Islands, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu) were the first to sign the country strategy papers under the framework of the 10th European Development Fund - allocating them EUR267mn for the period 2008-2013.

Three priorities were set: good governance, sustainable management of natural resources and growth.

Louis Michel, the European Commissioner for Development and Humanitarian Aid, observed at the time that:

"With this signing, the Pacific Islands will be that little bit closer to Europe. I am delighted to see that agreed strategies are on the way now for concrete projects for the benefit of the peoples of the Pacific Region."

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