The Turks & Caicos Islands, a British Crown Colony lie between the Bahamian islands and Hispaniola (Haiti & Dominican Republic).
Due to a lack of employment opportunities during the 1960's and 1970's, many TCI citizens emigrated to the Bahamas and the US. Fortunately, due to the growth in tourism and offshore financial services, many "Belongers" are now returning. Much of the unskilled labour in TCI is provided by immigrants from Haiti and the Dominican Republic just 100 miles to the south.
The TCI offshore financial industry which currently accounts for about 15% of the country's $90 million economy, began with the introduction of the Companies Ordinance, 1981 and falls under the supervision of the Financial Services Commission, with the resident British Governor having the ultimate authority. In 1995 this role earned the Commission an estimated revenue of $3 million.
The depth of the legal infrastructure in TCI is impressive. A wealth of talented Canadian and English barristers are resident, in addition to lawyers licensed in Hong Kong, The Bahamas, Cayman Islands and the US. TCI also enjoys the presence of two of the Big Six besides a number of local accounting firms.
COMPANIES
TCI is presently at the forefront of offering new legal structures properly adapted to the realities of onshore regulation and its resulting limitations. Legislation covering Limited Life (Liability) Companies (LLC's) has been in existance for some time as have Limited Partnerships (LP's), Exempted Companies (International Business Companies), Asset Protection Trusts, Mutual Funds, Unit Trusts and Trust Companies.
Some of the largest US corporations including Enron and Chevron take advantage of TCI's benefits, and is currently the world's largest domicile for Credit Life Reinsurance (Producer Owned) Companies, with over 1,750 such companies.
RESIDENCY
In addition, TCI offers a number of unique structures for those interested in obtaining residency or for immigrants seeking to legally defer taxation in their new country of residence.
RECENT GROWTH
TCI's company and shipping registries have each grown strongly over the past few years. For example the total number of companies registered in TCI by year end 1995 amounted to 13,634.
During 1995 2,858 new incorporations occurred, compared with 2,605 for the same period in 1994 and 1,916 in 1993.
In addition close to 2,000 insurance companies are licensed in TCI, including captive insurers and reinsurance companies.
Trademarks and Patents may be registered in TCI under legislation dating back to 1978.
SHIPPING
Ships up to 150 Gross Tonnes under British tonnage calculations may be registered. Registration is confined to vessels owned by British subjects including bodies corporate established under Britain, TCI and other British Dependent Territories.
TRUST AND TRUSTEES
At present 18 different trust companies are licensed in the TCI which requires paid up capital of $250,000 for companies seeking to offer trustee services.
Increasing use is being made of the TCI Family Trust Company (Private Trust Company) providing certain settlors with more control over their families' finances than otherwise available. The forthcoming Voidable Dispositions Bill seeks to tighten up the Asset Protection Trust legislation already in place and t is expected that a statute of limitation of between 3-5 years will be put in place.
BANKING
Two retail banks, Barclays Bank PLC and Bank of Nova Scotia serve the TCIslander's needs as well as those of international investors. Offshore banking licences are held by the Turks & Caicos Banking Company Ltd., Bordier Bank (part of the Swiss Group) and First National Bank. It is hoped in the TCI that more well-known banking groups will establish a presence. As has been the case in other offshore centres, an increasing number of banks generally leads to a growth in related businesses such as brokerage and investment management as well as the number of mutual funds and unit trusts establishing a presence. To some extent the limited number of banks currently in TCI is attributable to its rather recent expansion as an offshore centre.
COMPETITION
By comparison, the Cayman Islands hosts some 540 banks. However, currently all British Dependent Territories, are more limited in the types of banks they may attract than in the early 1970's and 1980's when small private banks could be established with ease in many offshore jurisdictions. Dependent Territories are now mostly limited to licensing well-established banks in the world's top 1,000 or so. It is a precondition that any new bank licensed must be regulated by its home country or at least by an acceptable country besides the TCI Supervisory Authority.
MUTUAL FUNDS
A number of innovative collective investment schemes (mutual funds) are in the pipeline amongst various service providers in TCI. Some of their proposals would directly benefit TC Islanders.
Mutual Funds offering investments to the public are required to be approved by the FSC. Proposed legislation for 1996 will create standards of quality designed to encourage fund operators and administrators to make TCI their domicile.
Restrictions are not imposed on the type of investment which a fund chooses to make, rather the emphasis is on demonstrating the manager's expertise in the investment area selected.
Although mutual funds can be set up under the current Companies Ordinance, 1981 - a new Mutual Fund law is expected to be passed soon. At present mutual fund operators are required to be licensed and benefit from a US dollar based economy with no exchange controls.
TOURISM AND RELATED DEVELOPMENT
With an increasing number of new upscale, resorts and condominiums being constructed, particularly on Providenciales, the most developed of the islands, real estate appears to be well positioned for further growth. The number of tourists visiting TCI is expected to reach 100,000 this year, which is more than double the 1990 figure. The growth in tourism especially o. Providenciales, has led to the migration to Provo of Islanders from Grand Turk, the islands' seat of government, as well as from other islands such as South Caicos, Middle Caicos and North Caicos.
TRADE AGREEMENTS
TCI benefits from a number of attractive trade agreements with the Caribbean, the European Union, Canada and the US. Although a number of light industry and related projects are underway in TCI it is felt that further policy initiatives in this regard such as the formulation of a free trade zone regime with standardised incentives are needed to help retain a better population balance between the islands.
WELL POSITIONED
The sophisticated legal and accounting infrastructure found in TCI makes it one of the best positioned offshore finance centres to capitalise on the new opportunities afforded offshore jurisdictions by the continual over regulation, increasing taxation and outrageous litigation found onshore.
The friendly nature of the local Belongers, the use of the US dollar as legal tender, TCI's location just 80 minutes flying time from Miami, pristine miles of unspoilt beaches, coupled with an excellent legal infrastructure and modem up to date laws, makes TCI one of the leading candidates amongst emerging offshore finance centres to join the ranks as one of the most established offshore finance centres world-wide.
Boasting very sound trust and trustee licensing legislation, a sound Companies Ordinance which provides for such unique structures as Hybrid and Guarantee companies, Limited Partnerships, LLC's and unit trusts, bodes well for the future.
As in the case of o- previous special editions, it is hoped that the editorial contributions appearing as part of this in depth feature on the Turks & Caicos Islands will shed light on all of the subject matter referred to above.
We trust all of Offshore Outlook's readers will come away with a far better understanding of the advantages and benefits to be gained from utilising TCI as an offshore finance centre.
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.
