TURKS & CAICOS ISLANDS

You will deserve that fine rum cocktail and succulent local lobster dinner after a day’s scuba diving, snorkelling, sailing or just plain swimming in the buoyant crystalline waters of the Turk & Caicos Islands.

Sugar white sands and one of the longest coral reefs in the world make the Turks & Caicos special. The archipelago is not a mass tourist destination. It is more of a low rise and low key kind of place. Less known than many of its neighbours, the Turks and Caicos has been described as one of the Caribbean’s best kept secrets and this is despite the fact that celebrities like Cameron Diaz and Bruce Willis frequent its shores.

Of 40 islands, just eight are inhabited. With 230 miles, of pristine beaches and about the size of the state of Florida or the Principality of Andorra, the archipelago is a 75-minute flight from Florida. The Bahamas, Cuba and the Dominican Republic are easily accessible by boat or plane. As a British Overseas Territory the official language is English, though some Creole is spoken. The US dollar is the local currency.

The Property Market & the Economy

A buoyant property market has seen capital growth over the last five years of between 5 per cent and 10 cent according to former government Chief Minister, Washington Misick, OBE, a local man who now heads the new Pavilions beachfront resort development.

Although properties can be picked up for under US$150,000, they are likely to be inland and perhaps to have been constructed before today’s stringent building codes were in place. Just because the recent hurricane Frances by-passed the islands – notwithstanding, they have not been severely hit since 1960 – high construction standards are paramount and recognised so by the government.

Although by law the property market is open to outsiders, owning property does not confer permanent residency. There are three main ways to stay. If, for example, your property costs US$500,000 or you invest this amount in a business, residency is automatic once you pay US$15,000 as a lifetime one off fee. Or you can apply for a 30-day visa which may be extended up to 90 days after which time you have to exit the country – though there is no time limit on how long you must remain away.

Alternatively each year you can pay out US$1,000 for the right to remain in the country.

Tourism, fishing and a small offshore financial service sector are the mainstay of the economy.

But nowadays the highly regulated construction sector and real estate are in the ascendancy. An important government revenue stream derives from customs receipts for imported capital goods and food. Gross Domestic Product is US$216m with GDP per capita at around US$11,000. Investors from Canada, Britain and the USA are putting substantial money into the economy, which is particularly appealing in a favourable tax regime where there are no capital gains, inheritance, income or wealth taxes.

It is difficult to think about a Caribbean tax friendly jurisdiction without conjuring up notions of money laundering, especially if you know that the United Nations identified the Caribbean region as responsible for laundering US$US60bn annually, estimated to be 10 per cent of laundered funds worldwide.

Following a major attempt to halt these practices, and after the G-7 formed the Financial Action Task Force on Money Laundering (affiliated with the Organisation for Economic Cooperation and Development (OECD) over a decade ago, The Turks and Caicos was identified as one of 35 international tax havens. The good news is that the islands were not on the OECD’s short list of ‘uncooperative’ jurisdictions

By the end of December this year a commitment for greater transparency of tax and regulatory systems as well as the establishment of effective exchange of information for tax matters with OECD countries will come into effect.