Cook
Islands Forms of Offshore Operation
Offshore operations may take place within the
following forms:
Click
on the appropriate form for details of its legal
basis in Forms of Company.
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Cook
Islands Inclusion on FATF Blacklist
In
common with many other offshore jurisdictions,
the Cook Islands has responded to pressure from
the OECD and FATF by tightening up its regulatory
regime. Specifically, the Cook Islands has responded
to its inclusion on the FATF blacklist of jurisdictions
with weak anti-money laundering legislation.
In September 2000 the Cook Islands parliament
passed the Money Laundering Prevention Act,
which provided for the setting up of a Money
Laundering Authority, to consist of the government's
financial secretary, the commissioner for offshore
financial services and the commissioner of police.
In
2003 a series of nine new measures were introduced
in the Cook Islands Parliament over the regulation
of domestic and offshore financial industries
after the cabinet approved the work of an Anti-Money
Laundering/Counter Financing Terrorism Committee.
The measures included a Financial Transactions
Reporting Act, which required all banks to report
local and international money transfers to a
central financial intelligence unit. The operators
of offshore companies, banks, trust accounts
and insurance firms have been required to make
full disclosure since June 4 2004 as a result
of the new legislation.
The issue of revised FATF regulations in 2004
meant that the 2003 legislation had to be reviewed,
including the Financial Transactions Reporting
Act 2003, Proceeds of Crime Act 2003, Financial
Transactions Reporting (Customer Identification)
Regulations 2004, Financial Transactions Reporting
(Offering Companies) Regulations 2004, and the
International Companies (Evidence of Identity)
Regulations 2004.
Following
an International Monetary Fund review in 2004,
various
regulations relating to anti-money laundering
legislation were passed.
Following
a review undertaken by the Financial Supervisory
Commission, amendments were also drafted to
the International Trusts Act and the International
Partnerships Act. The amending Bills arise from
and remove the powers of the Minister of Finance
to grant exemptions from those Acts and “soften”
the secrecy provisions contained in them.
An
IMF assessment report issued in December, 2004,
was complimentary; however, the IMF made a number
of detailed recommendations for the improvement
of training, transparency and supervision of
the financial sector.
It
was decided at the FATF Plenary XVI on 11 February
2005 that the Cook Islands should be removed
from the list of Non-Cooperative Countries and
Territories (NCCTs). A recent FATF visit had
confirmed that the jurisdiction is effectively
implementing anti-money laundering measures.
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Cook Islands Tax Treatment
of Offshore Operations
Offshore
entities, as listed above, are exempt from Cook
Islands taxation, except that they pay Stamp Duty.
As far as companies are concerned, offshore entities
are those which are registered under the International
Companies Act 1981-2 (as amended); this therefore
includes offshore banking and insurance companies.
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Cook Islands Taxation of
Foreign Employees of Offshore Operations
There are no special rules applying generally
to the foreign or local employees of offshore
operations, who will pay tax according to the
normal rules if they are resident in the Cook
Islands (see Personal
Taxation).
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Cook Islands Employment
and Residence
There are no special privileges for the employees
of non-resident or offshore entities. The Entry,
Residence and Departure Act 1977 states that anyone
other than a Cook Islands citizen or permanent
resident who wishes to live and work on the Islands
must first obtain a work and residence permit.
An application for a work and residence permit
can be made online.
A
business or employer can apply for a work permit
on behalf of an expatriate employee. As a rule,
a permit is issued for a year, and is renewable
on application by the employer. The work permit
is tied to the applicant's employer and is not
transferable to another employment.
Under
the Leases Restrictions Act 1976 a foreigner may
lease land for up to 5 years without obtaining
special permission. A foreigner wishing to lease
land for more than 5 years needs to obtain the
approval of a Government committee set up under
the Act. A foreigner cannot lease land for more
than 60 years and is forbidden from owing a freehold.
A foreigner is defined as anyone who is not a
permanent resident or a citizen of the Cook Islands.
In
February 2008, the Entry, Residence and Departure
Act was amended with regard to the granting of
permanent residence .
Under
the updated legislation, the granting of up to
650 PR certificates was permitted, 150 more than
the previous limit of 500.
The
amendment also required applicants not only to
be of "good character" but to have a
proven record of having made a "significant
positive contribution to or investment in the
Cook Islands in terms of skills, expertise, community
work or financial investment."
There
was also a new seperate category allowing unlimited
number of PR certificates to be granted to those
married to Cook Islanders or PRs, as long as they
have been married for no less than five years.
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