INVESTMENT CONSIDERATIONS

GOVERNMENT POLICY

The primary aim of the Cook Islands Government policy is to encourage optimum local investment. The ability of Cook Islanders to participate in development investments or new enterprises should be pursued as far as practicable, depending on one or more prevailing factors, for example, technical expertise, managerial skills and/or investment capital.

The Government also recognises that foreign investment can make enormous contributions to the economic and social development of the Cook Islands therefore fully encourages investment proposals that are clearly beneficial.

RESTRICTIONS ON FOREIGN INVESTMENT

The Cook Islands provide favourable conditions for foreign investment. Foreign investors can engage 100 percent beneficial shareholding in an approved foreign company. Foreign Investments are not subject to strict export ratios. All foreign finance is checked by the Development Investment Board.

Reserved investment areas are those in which new investments will be reserved primarily for Cook Islanders. These include copra production; commercial harvesting of pearl shell, shellfish and other reef and lagoon products; small retail shops; and garment manufacture for local sale. A full listing is available in the Cook Islands Investment Code, from the Development Investment Board. While foreign investors will generally be discouraged or not allowed in reserved activities, encouragement may be given in special circumstances if it is considered that such an enterprise will have an improved chance of succeeding as a result of the joint venture between local and foreign investors.

TRANSFER OF CAPITAL AND PROFITS

There are no exchange controls or regulations that hinder the repatriation of capital, profits, dividends, royalties, loan payments, interest earned on loans and other forms of foreign owned finance. A withholding tax rate of 15% applies to outgoing revenue/income. The ANZ Group and Westpac Banking Corporation provide commercial & international banking services and both have their foreign exchange rates controlled from New Zealand and Australia.

Subject to any law of the Cook Islands, foreign enterprises shall be entitled to the following:

1. to remit earnings and foreign capital overseas;
2. to remit amounts required to meet liabilities on foreign loans and the cost of other foreign obligations;
3. to remit compensation received whilst in the Cook Islands.

TAXATION

Company tax is charged at 20 percent. Value Added Tax (VAT) of 12.5 percent is taxed on all economic activity - VAT is a consumption tax. Withholding tax of 15 percent is imposed on payments of interest and dividends for overseas investors.

INVESTMENT PROTECTION

All foreign enterprises registered with the Development Investment Board and bound by the Development Investment Act 1995-96 will not be subject to compulsory acquisition or expropriation of its property except:

1. in accordance with due process of the law;
2. for public purpose defined by the law;
3. for payment of compensation in a manner prescribed by law.

INVESTMENT INCENTIVES

The Development Investment Act 1995-96 administered by the Cook Islands Developmen(Investrnent Board is regarded as the basis for all incentives and concessions.

The Development Investment Code identifies concession areas where incentives apply to particular sectors (eg, commercial agricultural livestock, fishing operations, black pearl farming, commercial manufacturing and processing and tourism). These incentives include exemption from customs duty and import levy, permission to lease land, work permits, and a 100% depreciation write-off facility from Year 1.

In addition to these concession areas, there are 18 desired investment sectors that the Government promotes to foreign investment. These areas do not necessarily attract incentives, however they are encouraged and welcomed by the Government.

CONTACTS FOR FURTHER INFORMATION