Turks and Caicos Islands’ Offshore Financal Services and Products

by John Phillips, The Claymore Group

If you can take a few moments away from the sun, the turquoise waters, the spectacular reef life, the golf and the many other delights these islands offer to consider the mundane, practical issues of investment and asset protection in this zero tax jurisdiction I am sure that you will discover yet another major attraction to the Turks and Caicos Islands (“TCI”). Although not the best known offshore domicile, the Turks and Caicos Islands offers arguably the best choice for the offshore investor. The obvious advantages are Zero Tax; Stability of a British Crown Dependent Territory; the Currency is US Dollar; Modern and Efficient Legislation; and a High Quality well developed Infrastructure. TCI has recently passed legislation protecting against money laundering and use of our offshore companies for otherwise handling proceeds of crime. We firmly believe that no responsible offshore jurisdiction can properly serve the needs of its clients unless it can also protect them and the domicile itself against abuse by criminal elements.

The cornerstone of offshore financial business is the company itself and the Turks and Caicos Island’s Companies Ordinance 1981 (as amended) offers a quality product with a well defined structure. The exemptions allowed under Section 185 of the Ordinance minimise the reporting and record keeping required of companies doing business mainly outside the Islands. The Confidential Relationships Ordinance protects the owners and beneficial owners against disclosure of information which they prefer to keep confidential but will not apply in the case of criminal activities. Although the exempted company conducts its business mainly outside the domicile this does not restrict the ability of the company to handle its investment portfolio in TCI. Investments in stock markets can be placed through local brokers and banks and there will be no tax applied locally to proceeds, interest or capital gains. Through local investment managers and advisors the company can also invest in TCI. The islands are developing rapidly and many opportunities exist for the investor in mortgages or commercial loans. This market is very attractive and the interest rates are high but the investor must ensure that he takes sound advice from professional advisors before committing to this type of investment. It should be noted that investment in real property is not permitted for exempted companies but ordinary companies also enjoy the benefits of no taxes applied to gains and profits whether from real estate or investments. The Company Managers Licensing Ordinance 1999 provides a sound basis for the regulation of all company service providers and places TCI in the front rank of offshore domiciles raising the standards of services and protection of client interests.

The Turks and Caicos Islands has been very successful in the fields of insurance and captive insurance and the regulatory standard is high in this industry. Insurers based and licensed in the Turks and Caicos Islands enjoy the benefits of tax free investment of their reserves and surplus. The Insurance Ordinance 1989 (as amended) offers flexibility to address niche markets or speciality insurance products tempered with a strict and efficient regulatory system. Operating costs are generally much lower than competing domiciles and therefore the Turks and Caicos Islands is attractive to captive programmes with modest premium income.

The Turks and Caicos Islands trust laws are based upon the United Kingdom’s concept of a trust and the legislation worded more to enable than restrict. The irrevocable discretionary trust is still the internationally recognised standard for preservation of wealth for future generations. You will receive sound advice on trust business from experienced practitioners in the Islands.

New legislation for the organization and management of Mutual Funds offers the smaller offshore investor an efficient means for pooling investment as well as servicing the needs of the larger scale mutual funds. The emphasis is on fund management and care has been taken to protect the investor.

All in all, the Turks and Caicos Islands offers a range of modern legislative products geared to meet the needs of the new global economy with accompanying regulatory practices. The prospective investor should take the time to interview practitioners in order to establish a comfortable relationship with a firm which will provide reliable services consistent with the investor’s needs and strategy. Cheaper is not always better in terms of appointing an advisor upon whom you will rely to handle your offshore portfolio; look instead at value for money in respect of the service arrangements you make. You will find a number of capable and experienced practitioners in the Turks and Caicos Islands who can bring their experience to bear in the structuring and strategy upon which you base your offshore investment portfolio.

Getting into an offshore investment position is easy but developing the strategy and the ultimate exit requires more thought and attention to planning. Take good advice from the professionals in the Turks and Caicos Islands before committing to the simple formation of a cookie cutter company which is neither designed nor structured to suit the particular needs of the investor. You will find many experienced creative advisors in this domicile. Set aside a little time to investigate the benefits of doing business in the Turks and Caicos Islands and you will find that this domicile compares favourably with any alternative not only in terms of cost and availability of sophisticated financial products but also in protection of the investor by means of strict regulation against those elements which have historically given offshore finance an unfavourable reputation. Note also that our company law permits redomiciliation of companies incorporated elsewhere so if you believe that an existing offshore portfolio may be better handled here, apply for more information.