Business Environment

The Cook Islands is on the Financial Action Task Force (FATF) blacklist of jurisdictions that do not meet international standards against money laundering. In March 2002 the jurisdiction made a commitment to the Organisation of Economic Cooperation and Development agreeing to exchange information with overseas authorities in criminal tax matters by 31 December 2003 and in civil tax matters by 31 December 2005.

Foreign investment is regulated under the Development Investment Act 1995-96.  Foreign entities must apply for registration with the Development Investment Board, which is responsible for the review and approval of all applications, for exemptions of customs import levy, and for work and resident permits. Companies may be granted full or partial exemption from import duty or levy on the importation of plant, equipment, machinery, or construction materials used or to be used in an approved activity. Generally, eligible companies must be incorporated under the International Companies Act 1981-82. Banks and insurance companies fall under the Offshore Banking Act and The Offshore Insurance Act.

The International Trust Act 1984 allows for asset protection trusts. Trustees are regulated by the Trustee Companies Act 1981. Resident trustees are required. Limited partnerships are governed by the International Partnerships Act 1984. An international partnership must have one resident partner, which can be either a resident licensed trustee company or an international company.

Residence and work permits may be granted for periods up to three years to key personnel or employees of an approved enterprise. The final decision is made by the Ministry of Foreign Affairs and Immigration.

Taxes
The International Companies Act exempts non-resident companies from any tax. For resident companies, tax is charged at 20%. Turnover tax is 10%. Withholding tax of 15 per cent is imposed on payments of interest and dividends for overseas investors. Payments to local residents are taxed at 5%. Withholding tax may be rescinded for companies which are considered to be contributing to national development. Capital and profit repatriation are not subject to tax.

Latest available figures

Country
Republic of Costa Rica. Independence from Spain on 15 September 1821.

Population
3,773,057 (July 2001 est.). Growth rate 1.65%. White (including mestizo) 94%, black 3%, Amerindian 1%, Chinese 1%, other 1%.

Capital
San José

Language
Spanish (official).

Currency
Costa Rican colon. US$1 = C396.7 Costa Rica colon (March 2003).

Legal system
Judicial branch: Supreme Court or Corte Suprema (22 justices are elected for eight-year terms by the Legislative Assembly). Legislation is based on the Spanish civil law system. There is judicial review of legislative acts in the Supreme Court.

Government
Branches: Executive--president (head of government and chief of state) and two vice presidents. The president and vice presidents are elected on the same ticket by popular vote for four-year terms. The cabinet is made up of up to 15 ministers, one of whom also is vice president. Legislative: 57-deputy unicameral Legislative Assembly elected at 4-year intervals by proportional representation in each of the seven provinces (Alajuela, Cartago, Guanacaste, Heredia, Limon, Puntarenas, and San José). The current government is formed by the PUSC.

Business Environment
As Cyprus is working toward joining the EU and is considered a front runner for membership, legislation and the tax system are undergoing reform. Cyprus was listed by the Financial Stability Forum as a 'group three' country (low quality of supervision of financial sector) but did not appear on the Financial Action Task Force's blacklist of jurisdictions deemed to be 'uncooperative' in preventing money laundering. Cyprus signed a letter of commitment with the OECD promising to implement exchange of information treaties in cases of civil and criminal tax evasion.

Cyprus' Companies Law (as amended) is similar to the UK's former Companies Act 1948. International business companies can be registered as a public or private company incorporated in Cyprus, as a branch of an overseas company, or as a general or limited partnership.  Private companies may be registered as exempt or or non-exempt. An exempt private company must not have corporate members, must disclose beneficial owners, and must be owned by not more than 50 individuals. Exempt companies do not need to annex a financial statement to a copy of the annual report submitted to the Registrar of Companies, may give loans and guarantees to directors, and may appoint auditors that do not have statutory qualifications. 

International business company registration is done through both the Central Bank of Cyprus and the Registrar of Companies. The names of beneficial owners must be disclosed to the central bank along with references. Additional qualifications must be met by international business companies engaged in banking, insurance or financial services business. The names of registered owners are kept as public records at the Registrar of Companies and the Official Receiver. Non-residents need permits from the Central Bank under the Exchange Control Law. International companies must belong exclusively to non-residents and must conduct business outside of Cyprus. Business must be conducted with foreign exchange. With the exception of exempt private companies, international business companies must submit an annual audited financial report to the Central Bank of Cyprus.

The Department of Merchant Shipping administers Cyprus' shipping register. To register a vessel under the Cyprus flag, non-Cypriot shipowners must first form a Cyprus shipping company as a private company with limited liability under the Companies Law.

The Central Bank of Cyprus is the supervisory authority for persons and entities offering money remittance services. In March 2002 a new money laundering guidance note was issued, defining who are to be considered principal beneficiary shareholders, requiring banks to identify the persons
who have ultimate control over a company's business and assets, regardless of the percentage they hold in the company, and introducing a new procedure for the identification and monitoring of accounts of politically connected clients.

Investors should note that independence from the UK was approved in 1960 with constitutional guarantees between the Greek Cypriot majority and the Turkish Cypriot minority. In 1974, a Greek-sponsored attempt to seize the government led to military intervention from Turkey, which took 40% of the island. The Turkish-held area declared itself the Turkish Republic of Northern Cyprus, a state recognized only by Turkey. Reunification talks resumed in December 1999 and are on-going.

Taxes
To comply with EU requirements the Cyprus government passed a package of legislation in July 2002 to simplify the tax system. The tax reform abolished the current preferential tax scheme for international business enterprises by introducing a unified tax rate of 10% for all companies, whether offshore or local. The measures took effect from January 2003. The new package also abolishes the tax exemption for international company branches, which have their management and control outside Cyprus, and for international partnerships, the taxation at half rates of expatriate employees, tax relief for salaried services rendered outside Cyprus and the exemption from withholding taxes, from stamp duties, from VAT and from customs and excise duties.Under the changes withholding tax will be reduced to 15% from 20% on dividends paid by Cyprus companies to resident individuals of Cyprus, which is generally the final tax. Companies will be subject to advance withholding tax as deemed distribution of 70% of their distributable profits.

Under amended income tax legislation, Cyprus residents will be taxed on their worldwide income, while non-residents will be taxed on their Cyprus income. Residence for individuals will be assumed if the individual stays for more than 183 days in a calendar year. For legal entities residence in Cyprus will be assumed if management and control is carried out in Cyprus.

The value added tax (VAT) rate was increased to 13% from 10% from July 2002, and will be further increased to 15% from January 2003. A VAT law of 2000 and relevant regulations came into force in February 2002 eliminating a special VAT regime in favour of international business enterprises.

Current situation
International business companies are currently taxed at 4.25% of their net profits.  Beneficial owners are not liable to any additional tax or dividends or profits. Expatriate employees are taxed at half their rates applicable to local residents. International business branches managed and controlled from abroad and international business partnerships are exempt from corporation or income tax. No capital gains tax is payable on the sale or transfer of shares. There is no estate duty on the inheritance of shares. 

Local companies are taxed at 20% for chargeable income up to CY£40,000, and 25% for chargeable income in excess of CY£40,000. The 20% tax rate also applies to registered branches of foreign companies that have been permitted to operate on the island. There is no withholding tax. Dividends paid by resident companies to foreign-incorporated companies are exempt from withholding tax. Profits from the operation of auxiliary tourist projects, such as golf courses, marinas, theme parks, and health centres, can obtain exemption from corporation tax for a period of up to 10 years.

Other tax exemptions to note: 60% of repatriated profits resulting from rendering professional services abroad are exempt from tax, and 90% of profits or dividends repatriated to Cyprus from a business based permanently abroad are exempt from tax. To qualify, the business should be carried out by a Cypriot individual or a company in which Cypriots own at least 15% of the equity.

Expatriates employed in the Industrial Free Zone pay half the income tax rate applicable to locals. Income tax ranges from 0-20%. There are no customs and excise taxes for operations in the Industrial Free Zone. Value-added tax is 10%. 

Business Environment
In October 2002 Dominica was taken off the Financial Action Task Force's blacklist of jurisdictions deemed as 'unco-operative' in the fight against money laundering. Dominica has also signed a letter committing the jurisdiction to implementing tax information exchange agreements with OECD-member countries. Dominica is a member of the Eastern Caribbean Central Bank, which acts as the monetary authority for a regional grouping of eight jurisdictions. During 1998, the offshore sector generated US$3.52 million in government revenue, most of which came from the economic citizenship programme. In 2002 Dominica ended the sale of passports under its economic citizenship programme.

Dominica's offshore financial sector includes international business companies, offshore banks, Internet gaming companies, captive insurance companies, exempt trusts, duty free zones, and international ship registration.

Offshore banks must have a minimum required paid-up capital of US$1,000,000. Offshore banks can engage in trust business. The International Exempt Trust Act No. 10 of 1997 makes provisions for spendthrift, charitable, and non-charitable international trusts whose settlers and beneficiaries must at all times be non-resident. The maximum duration of spendthrift and non-charitable trusts is 100 years from the date of creation while a charitable trust may have a duration exceeding 100 years.

Taxes
Offshore banks are exempt from all taxes and duties. International business companies are granted a 20-year exemption from all taxes and duties. Exempt insurance companies, management companies, and holding companies are exempted from withholding tax or any form of income tax on their business operations in Dominica

Business Environment
Gibraltar's status as a UK colony and its relationship to Spain and the European Union is currently under negotiation. In April 2002 the European Court ruled that Gibraltar's exempt company tax concessions was not state aid under EU rules, but that qualifying company status could be investigated by the European Commission. In February 2002 Gibraltar signed a letter of commitment with the Organisation for Economic Co-operation and Development, agreeing to exchange information with overseas authorities in criminal tax matters by 31 December 2003 and in civil tax matters by 31 December 2005.

Gibraltar's Financial Services Commission (FSC) is responsible for the regulation of the financial services sector. The government's marketing arm is the Gibraltar Finance Centre, a division within the Department of Trade and Industry. Legislation provides for offshore exempt companies, qualifying companies, private banks, trusts, ship registration, and residency of high net worth individuals. Gibraltar also markets itself as a manufacturing and distribution centre for non-European companies seeking access to the European Union through the New Harbours free-port zone.

A deposit protection scheme set up by Gibraltar in 1999 and the Banking (Gibraltar) Regulations 1999, passed by the UK Parliament 20 August 1999, gave banks the ability to operate in the UK and other EU member states on the basis of their Gibraltar registration. Insurance companies were authorised to cover risks in the EU in 1997. Gibraltar-based companies are now actively passporting banking and insurance services into the EU, and passporting in investment services is expected to follow soon.

The Gibraltar Companies Ordinance is based on the Companies Act 1929 of the United Kingdom along with amendments. Four types of company may be established under the legislation: a company limited by shares, a company limited by guarantee having a share capital, a company limited by guarantee without a share capital and an unlimited company.

Companies must have a registered office in Gibraltar, must file the statutory books there, and must submit an annual return to the Registrar of Companies containing details of the shareholders, directors and the capital of the company. The information is open to public inspection. A company incorporated in Gibraltar or a registered branch of an overseas company may apply for a tax exemption certificate, or a qualifying company certificate, both valid for 25 years. In circumstances where operations require a presence in Gibraltar, such as in the provision of financial services or import/export activities, then such operations would obtain qualifying company status rather than exempt company status.

Exempt companies are exempted from all taxes, while qualifying companies may pay tax up to a maximum of 35%. No Gibraltarian or Gibraltar resident may have a beneficial interest in the shares of an exempt or qualifying company. The beneficial ownership of the shares of exempt and qualifying companies must be disclosed to the Finance Centre Director.

Exempt or qualifying companies can be resident, managed and controlled in or from Gibraltar without affecting its tax status. There are no restrictions as to the nationality or residence of directors. The exempt or qualifying company may not, without the prior consent of the Gibraltar Finance Centre Director, trade or carry on business in Gibraltar, but may trade with other exempt or qualifying companies or non-residents. 

Taxes
Under the Treaty of Rome, Gibraltar is exempted from complying with the European Community's common customs tariff, common agricultural policy and the harmonization of turnover taxes. However, with the EU's push toward tax harmonisation, Gibraltar is considering adjusting the tax structure. Gibraltar does not have capital gain tax, wealth tax, inheritance tax, estate duty, or value-added tax. Corporate tax is set at the rate of 35%. Tax-exempt companies are exempted for 25 years from any form of Gibraltar taxation. Qualifying companies can apply for a tax rate of between 0% and 35%. Qualifying companies benefit in situations where a subsidiary company needs to make income remittances to a foreign parent in a country that requires the subsidiary to have been taxed at a minimum level to escape further taxation. Qualifying banks usually pay tax at 5%.

For qualifying companies fees payable to non-residents, including directors, and dividends paid to its shareholders are subject to withholding tax at the same prescribed rate as the company. There is no estate duty in Gibraltar. There is no stamp duty on the transfer of shares of a qualifying company.

The standard rate of tax for individuals is 30%. High net worth individuals may apply for qualifying status if they are non-resident and if they derive no income from Gibraltar other than from a qualifying company. The rate of tax is not less than 2% of income, up to a maximum of £20,000 in taxes paid. Interest received from deposits through qualifying or exempt companies is exempt from taxes. Gibraltar does not have exchange control restrictions.

Business Environment

In September 2001 the Financial Action Task Force added Grenada to the blacklist of jurisdictions deemed to be non-cooperative in preventing money laundering. 'Grenadian supervisory authorities have inadequate access to the customer account information and inadequate authority to co-operate with foreign counterparts,' the FATF said. 'Additionally, Grenadian financial institutions do not have adequate qualification requirements for owners of financial institutions.’ Grenada is also on the Organization for Economic Cooperation and Development's tax haven blacklist.

Grenada offers international business company registration and offshore banking and trust licenses. To obtain an offshore bank or trust license, applicants must first register an international business company (IBC) in Grenada through the Grenada International Financial Services Authority. The company must file a memorandum of articles and a memorandum of association listing the names of directors. A separate application must then be made for an offshore banking license under the Offshore Banking Act of 1996 or a trust license under the International Trusts Act, 1996. An offshore bank is defined as banking business conducted exclusively in currencies other than Eastern Caribbean dollars. There are no restrictions on remittances of capital, earnings on, and liquidation proceeds from direct non-resident investment. The ministry of finance must be notified of all outward transfers of funds.

Grenada’s economic citizenship program was temporarily suspended on 10 October 2001 due to concerns after the 11 September terrorism attacks. Economic citizenship was granted to 249 applicants in 2000 and 296 in 1999. Under the program, successful applicants have the right to hold Grenadian citizenship without having to live on the island. After six years of residence, economic citizens obtain full voting rights, as well as the right to hold public office. The overseas earnings and assets of an economic citizen are not taxed, whether or not he or she lives in Grenada.

Taxes
International business companies are not taxed. Grenada-resident trading companies gain double taxation relief when trading with Caribbean Community (Caricom) members and the United Kingdom. The Fiscal Incentives Act 1974 confers to 'approved enterprises' tax relief on income, plant, machinery, equipment, spare parts and raw material for the manufacturing of an 'approved product'. To qualify a company must have a product with 40% local value added, create a minimum of 10 jobs, and make a minimum investment in plant and equipment of EC$500,000. The product must also satisfy Caricom's rules of origin. Qualifying companies are exempt from the majority of the taxes described below:

• Corporate tax: 30% on annual net profit (waived for approved enterprises).
• Common external tariff (CET): 5% to 40% on the cost plus insurance plus freight (CIF) value of the landed price of goods purchased outside of Caricom. Duties where applicable are calculated on the CIF or on the cost and freight if the goods are not insured (waived for approved enterprises).
• General consumption tax: All imported goods: 25% on the CIF value plus CET. The consumption tax is compounded except on qualifying Caricom imports (waived for approved enterprises).
• Locally manufactured goods tax: 10%.
• Customs service charge: 5% on the CIF value of imported goods.
• Personal income tax: There is no personal income tax for those earning less than EC$60,000 annually. Personal income tax of 30% is payable on annual earnings in excess of EC$60,000.
• Withholding tax: 15% payable on non-resident management fees and royalties (waived for approved enterprises).
• Property transfer tax: Nationals pay 5% of the value of the land with or without improvement. Foreigners pay 15% of the value of the property and 10% on property other than land.
• Landholding tax: Paid by non-nationals at a rate of 15% of the value of the land with or without improvement. 
   
• There is no capital gains tax.
• Annual stamp tax: Tax on gross receipts levied in three stages.

Business Environment
The main areas of business are banking, mutual funds, investment, treasury, trust, administration, and insurance. Guernsey and Jersey (see Jersey Fact Sheet) and other dependencies make up the Channel Islands. As a UK crown dependency Guernsey’s relationship with the EU is defined by a protocol attached to the UK’s membership. The island complies with EU directives in the trade of industrial and agricultural products, but is not subject to any directives or regulations, including those dealing with harmonisation of taxation, financial services, exchange of information or social policy.

The Guernsey Financial Services Commission regulates the financial sector. Incorporation requires disclosure of an entity's beneficial owners to the regulator. Every company must have a registered office with books and records kept in Guernsey. There is no minimum capital requirement. Companies not owned or controlled by any Guernsey resident and that do not conduct any business in Guernsey are considered non-resident and can obtain exemption from tax on overseas business by being classified either as an exempt company or as an international company.

Guernsey allows the establishment of companies limited by shares, protected cell companies, and companies limited by guarantee, with or without share capital.

Resident companies are under the beneficial ownership or control of Guernsey residents. An exempt company is exempted from income tax on its non-Guernsey source income. It may also invest on a tax free basis in another exempt company, an exempt investment scheme or in a relevant Guernsey bank deposit. There are no restrictions on investing or doing business in Guernsey, but such activities will be liable to income tax. An exempt company is not required to file annual accounts, but must file any information necessary to quantify Guernsey sources of income. International company status is given to businesses wholly-beneficially owned outside Guernsey, and deriving income exclusively from non-residents. Banks, specified insurers, and companies that were previously regarded as either resident or tax exempt in Guernsey are not eligible to apply for international company status. An international company is required to submit annual accounts to the administrator of income tax.

The G-7’s Financial Stability Forum rated Guernsey as a ‘group one’ offshore financial centre deemed to be under ‘good quality’ supervision. In February 2002 Guernsey signed a letter of commitment with the Organisation for Economic Co-operation and Development agreeing to exchange information with overseas authorities in criminal tax matters by 31 December 2003 and in civil tax matters by 31 December 2005. Guernsey was not blacklisted in the Financial Action Task Force report on money laundering.

Taxes
Companies and individuals resident in Guernsey and branches of foreign companies with a permanent establishment on the island pay income tax of 20% on revenues generated on the island. Exempt status companies are not liable for income tax on overseas income. Dividends are not payable under deduction of income tax. International companies are liable to income tax at a rate determined on a case-by-case basis by the Administrator of Income Tax. The rate is between 0% to 30%. Taxes are fixed for a period of up to five years. There are no other direct taxes or capital taxes (with the exception of the dwellings profit tax). Banks get a special concession with regard to referred business. Profits made on the sale of a dwelling are taxed at the rate of 100%, subject to an allowance for inflation. Guernsey has no exchange controls. No legal restrictions apply to the transfer of profits, the repatriation of capital invested in Guernsey, or the transfer of royalties and fees.

Business Environment
Hong Kong is the world's tenth-largest trading entity and ninth-largest banking centre. At the end of 1999 Hong Kong was home to 285 financial institutions, including 76 of the world’s top 100 largest banks. The banking system held external assets of US$482 billion at the end of November 1999.  Hong Kong’s stock market capitalisation of US$540 billion at the end of November 1999, made it the 10th largest in the world.

Hong Kong has a mature and active foreign exchange market due to an absence of exchange controls and a favourable time zone location. The daily turnover of foreign exchange and derivatives trading is about US$79 billion, almost half of which is in US$/yen and US$/HK$ market. Around 60% of banking business is denominated in foreign currencies. The Hong Kong dollar is freely convertible. There are no restrictions on capital movements in to or out of Hong Kong. Foreigners can repatriate their capital or funds out of Hong Kong and borrow Hong Kong dollars in the Hong Kong market. There are no restrictions on the trading or ownership of securities or property, or in the setting up or owning of companies by foreigners.

A business or a partnership must be registered with the Company's Registry as a local company or an overseas company.  Overseas companies are defined as those incorporated outside of Hong Kong. The total number of overseas companies on register at the end of 2001 was 6,457. The total number of local companies on register was 510,380.

Banking
Hong Kong maintains a three-tier system of deposit-taking institutions: licensed banks, restricted licence banks, deposit-taking companies. Overseas banks may also establish local representative offices. The Hong Kong Monetary Authority is the licensing authority responsible for the authorisation, suspension and revocation of all types of authorised institutions. Only licensed banks may operate current and savings accounts, and accept deposits of any size and maturity from the public and pay or collect cheques drawn by or paid in by customers. Restricted licence banks are principally engaged in merchant banking and capital market activities. They may take deposits of any maturity of HK$500,000 (about US$64,103) and above. Deposit-taking companies are mostly owned by, or otherwise associated with, banks. Deposit companies may engage in a range of specialised activities, including consumer finance and securities business. They may take deposits of HK$100,000 (about US$12,821) or above with an original term of maturity of at least three months. Overseas banks without one of the three types of licenses may establish local representative offices in Hong Kong. Representative offices are not allowed to engage in any banking business and are confined mainly to liaison work between the bank and Hong Kong customers.

At the end of September 2001, there were 149 licensed banks, 48 restricted licence banks and 55 deposit-taking companies on register. The 252 authorised institutions operate a network of 1,527 local branches. Of these 252 authorised institutions, 220 are beneficially owned by overseas interests. In addition, overseas banks have 114 local representative offices in Hong Kong.

Securities
The Securities and Futures Commission (SFC) administers the laws relating to the protection of investors and regulation of any activities relating to securities and commodities trading/advising, securities margin financing and non-bank retail leveraged foreign exchange market in Hong Kong. The existing legislation requires a person to apply for different licences of regulated securities activity. There are currently 12 different types of licence. However, when the new Securities and Futures Ordinance becomes operational in 2002, each licensed person will only need one licence to carry on different types of regulated activity. However operators engaged in securities margin financing will be restricted to that activity under the new regime. The existing 12 types of licence will be categorized into nine types of regulated activity. The types of licenses are: licensed corporation, licensed representative, licensed representative - responsible officer; provisional licence - representative; temporary licence – corporations and representatives; and registered institutions. The nine types of regulated activity are:  dealing in securities; dealing in futures contracts; leveraged foreign exchange trading; advising on securities; advising on futures contracts; advising on corporate finance; providing automated trading services; securities margin financing and asset management.

At the end of December 2001, a total of 2,314 collective investment schemes were authorised by the SFC, an increase of 4.9% over the previous year ’s 2,205.

Insurance
Insurers and insurance intermediaries are regulated by the Insurance Authority. A captive insurer is required to maintain a solvency margin determined on 5% of the net premium income or 5% of the net claims outstanding, whichever is greater, and subject to a minimum of HK$2 million. As at 31 March 2002, there were 202 insurers (approximately 69% general business insurers, 22% long term business or life insurers and 9% composite insurers) authorised in Hong Kong. Of these insurers, 99 were companies incorporated in Hong Kong while the rest were incorporated overseas. 

Shipping
Hong Kong had 684 ships on register, with total registered tonnage of 14,193 million gross tonnes: Hong Kong Shipping Register.

Taxes
Corporate profits tax is 17.5% payable on net profits arising in Hong Kong or derived from business performed in Hong Kong. There are no taxes on capital gains, dividends, or interest. Hong Kong has no sales tax or value added tax. The standard salaries tax rate is 16%. Estate duty ranges from 0% to 15%.

Business Environment
As a UK crown dependency the Isle of Man’s relationship with the EU is defined by a protocol attached to the UK’s membership. The Isle of Man is not a member state of the European Union, nor is it an associate member. Under protocol 3 to the EU Act of Accession, the Isle of Man is part of the customs territory of the Union for the purpose of trade in industrial and agricultural products. For the purpose of trade in financial services and products the Isle of Man is outside the EU and directives in this area are not applicable.

The Financial Supervision Commission licenses and supervises all banks, investment businesses, collective investment schemes and building societies. The FSC is also responsible for the companies registry and has introduced a regulatory regime for corporate services providers. The Insurance and Pensions Authority (IPA) is responsible for the licensing and supervision of insurance companies and insurance intermediaries.

Companies are deemed resident if central management and control is exercised on the island. Offshore companies may set up as exempt companies or international companies or partnerships if the beneficial interest belongs to non-residents, and do not carry on business or have a source of income in the Isle of Man other than with other international companies and international limited partnerships. An exempt company must have a resident director and secretary and is able to undertake any trade or business, at or from, any premises in the Isle of Man but cannot be engaged in prescribed activities, which include manufacturing, retail, wholesale, distribution or transport, construction, land development, fishing, mining, or agriculture. An exempt company may not be a public company (other than an exempt scheme), a bank or an insurance company. 

International business companies and limited partnerships are formed under the International Business Act 1994 (as amended). They have the same features as an exempt company. However, an international company can be a public company. An international limited partnership is made up of a general partner and one or more limited partners. The partnership must be registered under the Partnership Act 1909 .The general partner must be a company other than one prescribed, which is resident, and has a place of business in the Isle of Man. At least one director and the secretary must also be resident in the Isle of Man. Limited partners, other than those which are international companies, must be resident outside the Isle of Man and not conduct any trade or business other than those prescribed.

In addition entities may be registered under the Limited Liability Companies Act 1996, which confers tax exemption on similar lines to the international limited partnership. Trusts fall under the Trustee Act 1961, the Variation of Trusts Act 1961 and the Perpetuities and Accumulations Act 1968. Banks are subject to licensing and supervision under the Banking Act 1998, as amended. Insurance business is controlled by the Insurance Act 1986 and regulations. 

Individuals carrying on investment business either in the Isle of Man or through a Manx incorporated company are required to hold a licence under the Investment Business Acts 1991 to 1993. Collective investment schemes fall under the Financial Supervision Act 1988, which provides for the regulation of three main classes: (1) Authorised collective investment schemes can be sold to residents, the UK, Guernsey, Jersey, Ireland and Japan and benefit from the fast track approval procedures in Hong Kong; (2) Professional investor fund; (3’) Experienced investor fund. 

The G-7’s Financial Stability Forum rated the Isle of Man a ‘group one’ offshore financial centre deemed to be under ‘good quality’ supervision. However, the OECD listed the island as among 35 jurisdictions that could face punitive measures over ‘harmful tax competition’. In response the Isle of Man signed a letter of commitment in December 2002 with the Organisation for Economic Co-operation and Development agreeing to exchange information with overseas authorities in criminal tax matters by 31 December 2003 and in civil tax matters by 31 December 2005. The Isle of Man was not blacklisted in the Financial Action Task Force report on jurisdiction's deemed to be 'uncooperative' in fighting money laundering. The Isle of Man currently is deciding on how to respond to a proposed EU taxation of savings directive. The directive would require the UK's dependent territories either to impose a 35% withholding tax on savings held by EU residents or to automatically exchange client information on interest paid to EU residents.

Taxes
The Isle of Man does not have any capital gains tax, wealth tax or inheritance tax. The jurisdiction levies income tax, a national insurance tax, a form of property tax and value-added tax (VAT). Exempt companies do not pay income tax, but are subject to an annual fee. International companies may apply to be assessed on the whole or part of its income to a maximum of 35%. International limited partnerships do not have a liability to income tax but pay an annual fee. Insurance and shipping companies benefit from a 0% rate of taxation. Resident trading companies pay 10% on the first £100 million of profit and 18% on higher levels. The income tax rate on a company’s non-trading income is 18%.

The Isle of Man is the only offshore centre in the EU's value added tax regime. Most companies with a turnover of £55,000 or more are required to register for VAT, charged at 17.5% on most sales. The main employment tax is national insurance and is levied at a rate of 11.8% on earnings above £89 per week. The income tax standard rate for individuals is 10%, with a maximum rate of 18%.

Business Environment
The main areas of business are banking, mutual funds, investment, treasury, trust, administration, and insurance. Jersey is not part of the EU, but has a special relationship defined by a protocol attached to the UK’s membership in the European Community. Under the terms of the protocol, the island complies with EC directives in the trade of industrial and agricultural products, but is not subject to any directives or regulations, including those dealing with the harmonization of taxation, financial services, the exchange of information, or social policy. However, a proposed EU directive on tax harmonization seeks to apply the regulations to dependent territories. The UK opposes the directive in its current form.

Offshore entities apply for exempt or international business company status with the Registrar of Companies, an office of the Jersey Financial Services Commission (FSC). No Jersey resident may have a beneficial interest in an exempt company, unless indirectly through shares in a listed company that has a beneficial interest in the company. They may directly hold up to 10% of the shares if there are at least 10 people holding an interest in the company. Exempt companies are non-resident for tax purposes, and are not taxed on overseas income.

International business companies are newly-incorporated, are incorporated elsewhere but have ‘management and control’ on the island, or are Jersey branches of non-resident companies. International business companies are considered resident for tax purposes and are taxed at a rate between 0.5% to 2% on non-Jersey income (see taxes section below).

The FSC keeps details of beneficial owners of all companies. All companies must have a registered office and maintain a register of members, directors, and a company secretary and other records in Jersey. Directors and shareholders need not be resident in Jersey.  Private companies require a minimum of one director, but a public company requires at least two.  Residency is granted for short-term contract workers.

The Companies (Amendment No. 6) (Jersey) Law 2002 came into force on 1 September 2002 and introduced four new forms of companies and provisions for permitting redomiciliation, or continuance, of companies both in and out of Jersey. Until the amendment came into force, the only type of company that could be incorporated in Jersey was a company with par value share capital, whose members had limited liability through holding shares. The amendment extends incorporation to companies with no par value share capital, guarantee companies, unlimited liability companies, and single member companies. The legislation also alters the rules relating to the provision by a company of financial assistance for the acquisition of its own shares.

The G-7’s Financial Stability Forum rated Jersey a ‘group one’ offshore financial centre, ie, deemed to be of ‘good quality’ supervision. The OECD listed Jersey as among 35 jurisdictions that could face punitive measures over ‘harmful tax competition.’ Jersey signed a letter in February 2002 committing to the OECD's proposals and was subsequently taken off the tax haven blacklist. Jersey was not listed in the FATF report on money laundering.

Taxes
Exempt companies do not pay income tax on overseas income. Business passing through an established place of business on the island is taxed at the standard 20% corporate tax rate. International business companies are taxed 2% on the first £3 million of profits or gains, 1.5% on the next £1.5 million, 1% on the next £5.5 million and 0.5% on sums above £10 million. Profits or gains on Jersey-sourced income is charged at a 30% rate. The rate is to enable certain companies to avoid controlled foreign companies legislation. Trusts for non-residents are exempt from tax on overseas income and on bank deposit interest, and collective investment fund income arising in Jersey. All other companies pay the standard tax rate of  20% on worldwide income. There are no taxes or duties on capital gains, gifts, estate, or inheritance. There is no value-added tax. There are no currency restrictions.

Jersey funds are able to operate free of tax, apart from the exempt company fee of £500 applicable to open-ended investment companies. In terms of distributions from Jersey funds, income tax is not deducted from distributions to investors who are resident in countries other than Jersey. Double taxation treaties exist with Guernsey and the UK, but Jersey tax-exempt funds do not benefit from these treaties.

Residents pay income tax of 20%. Non-resident individuals do not pay income tax. There is no withholding tax on interest or dividend payments for non-residents.

Business Environment
As Malta is one of the leading countries vying to become a member of the European Union, government is in the process of adapting legislation and the tax system to comply with EU directives. The Malta Financial Services Centre (MFSC) is the sole regulator of the financial sector. The MFSC is currently being reorganised and renamed as the Malta Financial Services Authority.

Companies are considered resident in Malta if incorporated in Malta or if control and management are exercised in Malta. Malta's Companies Act, 1996 allows limited liability companies, general partnerships, and limited partnerships. A general partnership is called a 'partnership en nom collectif' and a limited partnership is called a 'partnership en commandite'. For tax purposes companies may be classified as international trading companies or holding companies. International trading companies are restricted to trading overseas. Companies providing back office management services to non-resident companies may operate as international trading companies. Holding companies are Maltese registered companies that hold assets, shares or investments.

Investment services and mutual funds are regulated by the Investment Services Act, 1994. The act provides for two types of licenses: an investment services license, and a collective investment scheme license. Collective investment schemes can be formed as open ended investment companies (Sicavs), close ended investment companies (Invcos), mutual funds, investment partnerships or unit trusts. Sicavs can be public or private companies. Invcos can only be public companies. Unit trusts are defined as those created under the legislation of another country recognised in Malta.

The Insurance Business Act, 1998, and the Insurance Brokers and Other Intermediaries Act, 1998 regulate the insurance sector. The Banking Act, 1994 and the Financial Institutions Act, 1994 regulate the provision of banking and financial services. A foreign trust formed under the Trusts Act 1988 is one in which the settlor and beneficiaries are not resident in Malta and in which the assets do not include immovable property situated in Malta. The trust must be registered with the MFSC to qualify for tax incentives. For shipping companies the Malta Freeport facility provides a trans-shipment centre for the Mediterranean. 

Under the Prevention of Money Laundering Act, Malta established a financial intelligence analysis unit (FIAU), which reports to the ministry of finance. Malta is gradually abolishing bearer accounts.

Business Environment
Mauritius made a commitments to the OECD to eliminate harmful tax practices by the end of 2005. Under the Financial Services Development Act 2001 the Financial Services Commission took over the functions of the Stock Exchange Commission, the Controller of Insurance and the Mauritius Offshore Business Activities Authority. The Financial Services Commission is the regulator for all non-banking financial activities, including global business activities (formerly known as offshore activities), insurance business, the securities market. The Bank of Mauritius is the regulator of the banking sector.

Global business is defined under the Financial Services Development Act 2001 as activities carried on from within Mauritius with persons all of whom are resident outside Mauritius and which is conducted in foreign currency. The Act also defines global business as activities carried on by a private company incorporated or registered under the Companies Act 2001, which does not conduct business with persons resident in Mauritius nor conduct any dealings in Mauritius currency and which holds a category two global business licence.

The main corporate vehicles available to carry offshore activities from within Mauritius are: (1) category 1 global business licence; (2) protected cell company; (3) category 2 global business licence. Offshore activities can also be carried out through a trust structure or a société (partnership).

A category 1 global business licence (GBC 1) company is allowed to engage in various activities including those involving capital raising from the public. It is characterised by its provisions for investors' protection and is required to file annual audited financial statements with the Financial Services Commission. A GBC 1 may be set up by direct incorporation, or by registration of a branch of a foreign company, or by way of continuation where it is allowed by the law in the country of origin. A branch of foreign company may have access to Mauritius’ double tax treaties provided that local tax authorities are satisfied that effective control and management of the foreign company is in Mauritius. The GBC 1 structure allows a foreign company to register in Mauritius by way of continuation and gain tax relief for existing holdings in a country with which Mauritius has a double taxation treaty. A GBC 1 may be unlimited or limited by shares or by guarantee (for non-profit making businesses only). A GBC 1 may be registered as a limited life company. Offshore funds may be listed on the Stock Exchange of Mauritius.

A protected cell company (PCC) is a special purpose vehicle providing legal segregation of assets attributable to each cell of the company whether corporately or individually owned. A PCC may be directly incorporated or may be registered as a foreign company by way of continuation as a PCC as long as the incorporation and registration requirements prescribed in the Companies Act 2001 are satisfied. The incorporation procedure for a PCC is similar to that of a GBC 1. In the case of a continuation, additional requirements as laid down in section 5 of the PCC Act 1999 must be satisfied. Section 6 of the Act stipulates that the suffix 'PCC' must be added to the name of the company. The PCC Act also allows an existing company to convert into a PCC.

A category 2 global business licence (GBC 2) provides for greater confidentiality and is used for holding and managing private assets. A GBC 2 is not allowed to raise capital from the public. The GBC 2 is not resident for tax purposes and is barred from benefiting from double taxation relief under the Mauritius' tax treaties. The GBC 2 may either be limited by shares or by guarantee or limited by shares and guarantee or simply unlimited. An international company may also be registered as a limited life company.

Under the Trust Act 2001 a trust may be set up by residents and non-residents in Mauritius as charitable trusts, discretionary trusts, purpose trusts or trading trusts. Trusts are not required to disclose the name of the settlor or beneficiary. Mauritius' forced heirship rule does not apply to trusts set up by non-citizens. The Trust Act 2001 allows the enforceability of a foreign trust provided that it does not purport to do anything which is amounts to an offence under the law of Mauritius or is 'immoral or contrary to public policy'. A trust may carry on a 'qualified global business' after obtaining a category 1 global business licence. A trust may not apply for a category 2 global business licence.

The Code de Commerce Amendment Act 1985 allows for registration as a société en nom collectif (partnership) and société en commandite simple (limited partnerships). Both types of registration may be used for structuring investment as under the Financial Services Development Act 2001. A société may conduct any qualified global business activities after it has received a category 1 global business licence from the Financial Services Commission. However, a société does not qualify for a category 2 global business licence. The Finance Act 1996 allows sociétés to be covered by Mauritius' double taxation treaties.

The main vehicles used to carry out business, other than an approved offshore business, are the company or the société (partnership). Local companies and local branches of a foreign company are governed by the Companies Act 1984. Sociétés are governed by the Code de Commerce. Local companies are regulated by the Registrar of Companies. Both public and private companies should have a minimum of two shareholders. Private companies may not have more than 25 shareholders. A company must have a minimum paid up capital of  Rs25,000.

There are four main vehicles available to carry out an approved offshore business from Mauritius: offshore companies, international companies, offshore trusts, and offshore sociétés. Offshore companies are governed by the Companies Act 1984, although the Mauritius Offshore Business Activities Act, 1992 overrides certain of its provisions in relation to offshore companies. 

Offshore entities are regulated by the Mauritius Offshore Business Activities Authority (MOBAA).  Offshore companies are required to disclose to the MOBAA their beneficial owners together with annual audited accounts.  Under the Mauritius Offshore Business Activities Act, any information relating to an offshore company remains confidential unless disclosure is authorised by the courts on application by the Director of Public Prosecutions for the purposes of an enquiry or trial into the trafficking of narcotics, arms trafficking or money laundering. An offshore company must have a registered office in Mauritius at all times, and a secretary who is resident in Mauritius. A management company resident in Mauritius must also be appointed. 

Within the category of offshore companies there are other specific vehicles that may be used: the protected cell company (PCC), the limited life company (LLC) and the offshore investment company (OIC). The PCC may be used only for the purposes of offshore insurance and offshore investment funds. Although the PCC is a single legal entity, it may comprise any number of cells. The assets and liabilities of each cell are segregated from the assets and liabilities of another cell. Creditors of a particular cell cannot claim against another cell. 

LLCs have a fixed life, at the expiry of which, or the occurrence of a specified event the LLC dissolves. For the purposes of US tax laws, LLCs benefit from favorable tax treatment. An OIC invests shareholders funds mainly in securities with the objective of spreading risk and achieving capital growth. Under the Mauritius Offshore Business Activities (Companies) Regulations 1995, an OIC may redeem shares out of profits, gains or revenue (whether realized or unrealized), and out of the paid-up capital, the share premium account or any other reserves.

International companies are governed by the International Companies Act. An international company is not resident in Mauritius for tax purposes, and does not benefit from any of the double taxation agreements Mauritius has with other jurisdictions. There is no requirement to have a secretary in Mauritius. An international company must have a registered agent and a registered office (where all statutory books and records have to be kept) in Mauritius. While there is no requirement to register an offshore trust with MOBAA, failure to do so renders the trust unenforceable. 

This is done by filing either a written or an oral declaration of trust. A one-off fee of US$250 is payable. The offshore trust is confidential. There is no requirement to disclose the either the settlor or the beneficiary. The Offshore Trusts Act provides for protective or discretionary trusts, charitable trusts, purpose trusts, commercial or trading trusts, and for foreign trusts. Mauritian law provides for a Société en Nom Collectif (partnership) or a Société en Commandité Simple (limited partnerships) to be registered for the purposes of offshore business activities. These vehicles are covered by the double taxation treaties Mauritius has with other jurisdictions.
 

Taxation
One of the major attractions of Mauritius as a base for inward investment in several countries, especially India, is its network of double taxation treaties.
Corporate income tax rates
 

• Current normal rate: 35% (for assessment year ending 30 June 2001, thereafter 25%)
• Tax incentive companies : 15%
• Listed companies on the Stock Exchange (including a subsidiary of a listed company) : 25%
• Offshore Companies: taxed as tax incentive companies (see below)
• International Companies : Exempt

Offshore Trusts
 

Income Tax
 

• Basic: 15% - 25%
• Salaries of expatriate employees: 12.5%
• Value Added Tax (basic rate): 10%