The Turks and Caicos Islands (TCI) have developed into one of the world’s premier offshore financial centers over the past few decades. TCI offers a favorable tax regime coupled with strong confidentiality laws to attract foreign investment and business registration. There is no corporate, income, capital gains or inheritance tax in TCI.
The Turks and Caicos Islands have signed over 30 bilateral Tax Information Exchange Agreements (TIEAs) and multiple multilateral agreements to enable international tax cooperation and combat tax evasion. This facilitates information sharing if illegitimate offshore activities are suspected.
While the 2008 global financial crisis and scandals like the Panama Papers have compelled Turks And Caicos Islands to enhance regulation and compliance, the islands’ small size can make it difficult to effectively monitor all financial activities. Additional investments into regulatory bodies may be prudent.
TCI’s offshore financial services sector employs over 1,500 people directly, and even more jobs indirectly. Concerns exist on how diversification efforts, if not managed carefully, might impact incomes and employment.
A tough regulatory framework is in place for oversight of financial services. Turks And Caicos Islands is continuously enhancing compliance with international standards set by bodies like the OECD and FATF.
As of 2022, over 35,000 active companies were registered in Turks And Caicos Islands. Key offshore company types include- IBCs, LLCs, trusts and private foundations. Main users stem from— Canada, USA, UK and Brazil.
Major offshore activities revolve around asset protection, wealth management, international business and tax planning. Many investment funds and private equity firms also operate from TCI.
The main offshore financial center is Providenciales, where most banks, trust companies, law firms and accounting firms catering to offshore clients are based. However— Grand Turk, South Caicos and Salt Cay also host smaller financial centers.
While financial services account for over 40% of TCI’s GDP, concerns have arisen over the territory’s economic dependence on this volatile industry. Diversification into tourism and real estate has been touted to create more sustainable long-term growth.
TCI Makes use of its fiscal and legal incentives, along with proximity to major markets like the USA and Canada, to facilitate a thriving offshore financial services industry. However, economic dependence on this sector poses risks that policymakers are attempting to mitigate via diversification.
