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Today’s Top Headlines




Turks And Caicos Takes Strides Towards Self-Rule

by Amanda Banks, Tax-News.com, London

10 May 2012

The provisional Governor of the Turks and Caicos Islands, Ric Todd, has released a report detailing progress made towards fundamental reforms to the island's frameworks to prevent corruption, and correct fiscal imbalances, deemed necessary before the islands are returned to self-rule by the UK government.

The reforms are being carried out following the British government's intervention on August 14, 2009, where it assumed control of the island's affairs, removed its elected premier, cabinet and assembly, and suspended much of its constitution. The action was taken after an enquiry reported that there was a "high probability of systemic corruption" being perpetrated, including, it is alleged, by the island's former Premier Michael Misick.

Providing an indication of when the territory's elections might be held, the latest report states that many of the frameworks necessary for holding elections may only be in place in Autumn 2012, suggesting that the Turks and Caicos Islands may only be returned to self-rule in 2013, when the government is expected to post its first budgetary surplus.

Todd reported that a provisional Register of Electors is expected to be published in July 2012, with a final Register expected in either August or September. An Electoral Boundaries Commission, scheduled for July, will define the ten new electoral districts and a new Boundaries Ordinance will be prepared in August. Election information and poll worker training is in preparation and will be ready for implementation in the summer, the report says. The electoral registration of voters commenced in April, and will be completed at the end of June.

On fiscal reform, Todd reported that the authorities have significantly reduced the size, and improved the efficiency, of the public sector. Alongside numerous tax hikes announced in September, Todd said that the stand-in Turks and Caicos administration had already demonstrated significant progress in slashing the recurring budget deficit. The interim government reported in March 2012 that tax revenues had increased to USD118.5m for the first nine months of 2011, an improvement of 39% on the same period last year. The deficit was reduced significantly, by USD33.5m.

The UK government previously indicated that the territory would only be returned to domestic rule when it could demonstrate recurrent budgetary surpluses. “Creating a surplus in TCIG's annual accounts, where more money is received than expended, can be used to invest wisely in replacing key elements of the national infrastructure, as well as paying off part of the national debt,” Todd said.

“It is absolutely essential to rebuild the country's creditworthiness in the eyes of the international community, he continued. "Over time, restoring an acceptable credit rating for TCI will permit the country to refinance the remainder of its debt at an affordable interest rate when the UK loan guarantee expires in 2016.”

Pressure on the territory's finances remain however, with the the financial services sector still weak, Todd admitted, highlighted by the fact that around 40% of business licenses were recently not renewed. In response, and as part of a larger reform of the public sector, three bodies, including the islands' inward invest promotion agency, TC Invest, and administrative bodies, the Business Licensing Committee and the Business Licensing Appeal Tribunal, were either wound up or significantly down-sized, and brought within the auspices of the Turks and Caicos Islands government.

The Turks and Caicos Islands' finances are expected to only be brought into the black from April 2013, when a value-added tax is set to be introduced, and temporary levies - generally at a rate of 10% - are set to be rescinded.

Other reforms are also scheduled before the Turks and Caicos Islands are returned to self-rule, the report says. The authorities are currently undertaking preparatory work for a consultation to be launched towards a transparent and fair process for non-residents to apply for residency in the islands. The aim of the consultations, Todd said, is stronger borders, targeted and prioritized enforcement, effective employment services, and accurate and secure services for citizenship, civil registration and permanent status. According to the report, significant progress was made on preparatory work in the first quarter of 2012.

Further, work to improve legislation for tackling crime will see consultations on draft laws launched in May or June 2012, the report said, and a new Crown Land Ordinance, for the prudent management of government land, entered into force in March 2012.

TAGS: tax | fiscal policy | law | banking | international financial centres (IFC) | Turks and Caicos Islands | offshore | offshore banking

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