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Tax Update - Cook Islands International Companies

Updated: Jan 12, 2022

In 2020 the Cook Islands Government continued working closely with the Cook Islands financial service industry on its strategy for development and growth. The Minister of Finance and now Prime Minister Hon. Mark Brown has continued to support Cook Islands Finance initiatives. At the end of 2019 Hon. Mark Brown announced 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”.

This statement was followed up with a financial industry service providers meeting in August 2020 where stakeholders discussed the five year strategic plan of Cook Islands Finance. The financial industry reviewed the objectives and discussed opportunities for industry growth focusing on the development of new products and the review of the Cook Islands tax system. The review of the tax system is progressing, with the Ministry of Finance and Economic Management working closely with the financial industry to look at various options.

The Cook Islands, as part of its effort to promote good tax governance and meet its commitment to the European Union’s Code of Conduct Group, in December, 2019 passed a suite of legislation that included the removal of Cook Islands tax exemptions for Cook Islands companies incorporated or registered under the International Companies Act 1981-82 (“International Companies”).

International Companies incorporated/registered from 18 December 2019 are subject to Cook Islands company tax at 20% on profits pursuant to the Income Tax Act 1997 and the VAT Act 1997. International companies existing/registered before 18 December 2019 will first be subject to the same tax on their 2022 profits except where income is derived from IP assets acquired and new activities commenced after 18 December, 2019. In addition, in line with its domestic company tax regime, dividends paid to foreign shareholders will be subject to a 15% withholding tax.

The EU has revised its list of non-cooperative jurisdictions for tax purposes. As of 6 October 2020 the countries that have not committed to implement tax changes required by the EU or have failed to meet its deadline for doing so and that remain on the “blacklist” are: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands, Vanuatu and Seychelles.

The Prime Minister continues to support the initiatives of the financial industry and stated that, “the Government is continuing with its efforts to ensure it is meeting its international obligations whilst also supporting the development of its financial services. The review of our taxation system including the taxation of company income is still progressing.”

Further updates regarding any developments and tax reporting procedures for International Companies will continue to be released.

29 January, 2021

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