COOK ISLANDS 2020. Changes to the tax laws

We would like to bring to your attention, important changes to the tax laws of the Cook Islands. 

The Cook Islands Parliament passed a suite of legislation designed to meet the commitment made to COCG and avoid being listed as a non-cooperative tax jurisdiction. Due to a number of uncertainties that were beyond our control, we have not been able to communicate these changes to you until now.

It is important to note that the above changes only apply to Cook Islands International Companies and Insurance Companies.  

The changes do not apply to Cook Islands Limited Liability Companies (LLCs) or Cook Islands International Trusts. 

In summary, the legislation passed this week provides for:

• Removal of Cook Islands tax exemptions for Cook Islands international companies incorporated or registered under the International Companies Act 1981-82, subjecting those companies to the domestic company tax regime and a tax on company profit of 20%.
• Grandfathering provisions in the amended law provide that international companies existing at the date the new legislation will not be subject to the new rules until 2022.
• International companies incorporated following the passing of the new law will be subject to the taxation provisions immediately. This includes international companies carrying on international banking business from within the Cook Islands under the Banking Act 2011 and international companies licensed to carry on captive insurance business under the Captive Insurance Act 2013.

The Deputy Prime Minister and Minister of Finance of the Cook Islands, the Hon. Mark Brown, stated that “By passing this legislation the Cook Islands expects not to be listed as a non-cooperative tax jurisdiction and has again demonstrated its overriding commitment to meet all of its international obligations”. He goes on to say that “…in 2020 the Cook Islands will be undertaking a thorough review of its taxation system including the taxation of company income.  In addition, we will be exploring the introduction of a territorial tax system, consistent with those currently implemented in many jurisdictions, as well as other measures to ensure the Cook Islands remains internationally competitive and attractive to those wishing to do business here.”  

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