Doing Business In TCI 2014

A Q&A guide to doing business in Turks and Caicos Islands.

This Q&A gives an overview of key recent developments affecting doing business in Turks and Caicos Islands as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.

Overview

1. What are the key recent developments affecting doing business in your jurisdiction? The period of direct rule by the UK (2009 to 2012) ended in late 2012 with the election of a new local government and the coming into force of a new constitution.

   The Turks and Caicos Islands (TCI) economy has stabilised significantly and there has been a return to economic growth. Public finances have improved and business confidence has risen significantly. Tourism and resort developers have returned to the TCI marketplace and a number of large-scale tourism-related construction projects are expected to start in 2014.

   On the legislative front, there has been significant focus on taxation issues and regulatory enhancement. Investment-based permanent residency has been reintroduced. On the tourism and real estate front, a new Fractional Ownership Ordinance is expected to have a positive impact on construction and real estate development.

   Legal system

2. What is the legal system based on (for example, civil law, common law or a mixture of both)? The TCI is a common law jurisdiction modelled on the English legal system.

   A Magistrates' Court sits in most of the Islands and there is an appeal process from the Magistrates' Court to the Supreme Court. The Supreme Court is similar to the High Court in England and is presided over by a single judge. The Supreme Court exercises first instance jurisdiction in more serious criminal and civil matters that are beyond the Magistrates' Court's jurisdiction.

   There is an appeal process from the Supreme Court to the Court of Appeal. The court sits in the TCI in February and August of each year for about two to three weeks, depending on the case load. Appeals can be made from the Court of Appeal to the Privy Council, which sits in England. The Privy Council is the final appellate court.

   Foreign investment

3. Are there any restrictions on foreign investment (including authorisations required by central or local government)? There are no restrictions on foreign investment and the government has a successful open-arms inward investment policy. The Government Investment Unit carries out certain due diligence checks on potential investors.

   All businesses require a business licence and there are a number of categories of business licence which, except in exceptional circumstances, are limited to Turks and Caicos Islanders (for example, retail, trucking and car sales). Typically, large scale investments do not face any difficulty acquiring a business licence.

   There are no restrictions on foreign investment in TCI real estate. There are no restrictions on foreign shareholders (apart from in the business categories mentioned above).

4. Are there any restrictions on doing business with certain countries or jurisdictions? There are some restrictions on dealing with countries that are the subject of UK economic sanctions, such as Iran and North Korea.

5. Are there any exchange control or currency regulations? The TCI uses the US dollar. There are no restrictions on the transfer of money into or out of the TCI. However, funds of over US$500,000 coming into the TCI through local banks must be accompanied by satisfactory evidence of the source of funds, to comply with anti-money laundering guidelines. The threshold figure is set by the banks themselves, and lesser amounts may be subject to enquiry depending on how comfortable the bank concerned is with the particular transaction.

   There are no restrictions on, or reporting requirements for, the payment of profits abroad. Hard currency can be taken out of the country.

6. What grants or incentives are available to investors? The government can provide import and export incentives for establishing new enterprises (or expanding existing ones) that are seen to benefit employment and the TCI's economy (Encouragement of Development Ordinance). The government can grant relief from a variety of duties and fees, mainly on the import of materials to be used in connection with construction projects, but also on exports. The incentives are not restricted to TCI-owned enterprises. Generally, the level of fiscal concessions available to a foreign investor is greater for businesses based outside the main commercial island of Providenciales.

   Business vehicles

7. What are the most common forms of business vehicle used in your jurisdiction? Subject to the obtaining of any necessary business licence or other regulatory consents (the latter particularly in the case of financial services), the main business vehicles used are an:

   Ordinary TCI company limited by shares. Ordinary TCI company limited by guarantee. Ordinary limited partnership (LP). The TCI is also an emerging financial centre and TCI exempted companies are widely used internationally for businesses and asset-holding outside the TCI. Trusts are permissible under TCI law, but a trust is not generally regarded as a vehicle through which to conduct direct business (though a trust is frequently the owner of a company which conducts business). Joint ventures are generally created by having either a:

   Shareholders' agreement between the investors (in the case of a company limited by shares). Limited partnership agreement (in the case of an limited partnership). The TCI ordinary company is a flexible vehicle which can be incorporated quickly and which is not subject to onerous or cumbersome regulations. It is the most common vehicle used by foreign investors in...