12 May 2022

TURKS AND CAICOS ISLANDS: AN INTRODUCTION

TURKS AND CAICOS ISLANDS: An Introduction  

Turks and Caicos Islands Overview 2022 

The Turks and Caicos Islands (TCI) are a British Overseas Territory and situated to the south of The Bahamas, approximately 500 miles southeast of Miami, Florida.

TCI has demonstrated significant corporate and financial law stability over many decades and continues to do so. This is partially due to TCI having a stable and strong government benefited by TCI law being based upon English common law. This sits alongside a significant number of locally enacted TCI specific laws.

The currency of the TCI is the US dollar and there are no capital controls.

Current Economic Conditions and Market Developments

Luxury tourism is a major component of TCI’s economy, making up over 70% of TCI’s GDP. The domestic economy enjoys one of the fastest growth rates in the Caribbean. The TCI continue to experience heavy levels of foreign direct investment, primarily in five-star hotel, condominium resorts and managed luxury villa communities. Following the pandemic the demand for low density upscale-managed villa developments has grown exponentially.

The TCI real estate market, in common with such markets worldwide, suffered a significant dip during the lockdown year of 2020. However, in the latter part of 2020 and throughout 2021, the TCI real estate market rebounded significantly with special emphasis in the area of luxury villas for the international high-net-worth-individual market. The bulk of this activity was in TCI’s main commercial and tourist centre: the island of Providenciales.

2021 saw total sales of USD $751m ($290m in 2020), as reported by TC Sotheby’s International Realty, with USD $47m of reported sales in January 2022 alone, suggesting that the historic highs of 2021 will continue into 2022.

Outside luxury villas, most activity was in the luxury condominium market and boosted by the opening of The Ritz-Carlton Turks and Caicos, in Grace Bay, Providenciales. Investment on the developer side is continuing and ground breaking is expected on another major resort in the main tourist neighbourhood of Grace Bay, Providenciales, which will be a large mixed-use venture with both hotel and condominium elements. In the meantime, gated villa developments continue to be announced across Providenciales and demand has become such that significant foreign investment is now commencing in North Caicos, ten miles away and previously largely undeveloped for tourism purposes.

The zero direct tax climate in TCI and the ease of obtaining residency status continues to make investment desirable despite increasing land prices and relatively high construction costs. In the absence of any unforeseen economic or natural factors adversely affecting TCI, we anticipate a continued period of growth for the real estate sector.

Legislation 

The TCI government is making strides in diversifying the economy by seeking to grow the financial services sector. As part of this continued diversification, the TCI regulatory framework has been overhauled to make TCI competitive in the Caribbean market place. This has seen amendments to the companies, trusts and insolvency legislation all of which were wholly revamped, modernized and largely follow the internationally-successful BVI models.

Taxation  

TCI has no direct taxes: no income, capital gains, gift, inheritance, estate or corporation taxes. There are a number of indirect taxes that fund government revenue. These include hotel, restaurant and tourism tax, customs import duties, stamp duty on land transactions and departure tax. Revenues from financial services are also a significant contributor to government income.

Regulation  

In terms of financial services, TCI has an extensive regulatory scheme which governs most aspects of the TCI financial industry including banks, insurance companies, brokers, agents, company administration managers, trust companies, investment dealers, mutual funds administrators and money transmitters.

The TCI Financial Services Commission (FSC) is independent of the TCI government and its functions incorporate the supervision and regulation of licensees under the financial services regulatory ordinances and the monitoring of financial services business.

TCI’s anti-money laundering regime is to international best practices. Anti-money laundering and anti-terrorist financing is a priority of both the TCI Government and the FSC and all local service providers are obliged to comply with the regulations and are subject to FSC compliance audits.

Consequently, any individual or corporation seeking to register a legal entity or obtain TCI licensing needs to comply with the relevant regulations. The TCI anti-money laundering regulations have continued to be upgraded in line with international and FATF standards.

Dispute Resolution 

In light of the continued commercial economic growth in TCI it is necessary to have a strong foundation in the dispute resolution arena to assist in the likely increase in litigation which derives from such increased economic activity.

In addition to conventional court-room litigation, TCI offers resolution through alternative dispute resolution with both arbitration and mediation available.

In respect to mediation, the TCI judiciary introduced and brought into force the Court-Connected Mediation Rules 2021 (the “Mediation Rules”) on 16th August 2021. The Mediation Rules apply to civil and criminal matters.

The availability of these alternative dispute resolutions mean that TCI is competitive within the region. They also make TCI more attractive for investors who are reassured that there are speedier, less expensive and commercial avenues available to resolve disputes that may arise.

In terms of conventional litigation, the primary court of first instance for serious matters is the Supreme Court. The Supreme Court is similar to the High Court in England and is presided over by a single judge.

There is an appeals process from the Supreme Court to the TCI Court of Appeal. Appeals can be made from the TCI Court of Appeal to the Privy Council, which sits in England. The Privy Council is the final appellate court.

To further assist in the dispute arena, the TCI enacted the Limitation of Actions Ordinance 2021 which came into force on 14th October 2021. In essence, the Ordinance bars the bringing of various civil actions to the court after the expiration of certain prescribed limitation periods. The Ordinance is comparable to statutes of limitation in other Caribbean common law jurisdictions.

 

AUTHOR

Karen Willis, Partner at Misick & Stanbrook

Karen Willis qualified as an
attorney in 2006 and joined
Misick & Stanbrook in 2013.
Karen is tenacious and
commercial and has specialised
in all areas of real estate,
corporate and intellectual property law. Prior to
joining Misick & Stanbrook, Karen worked in a
top law firm in London with a particular
emphasis on commercial real estate. Karen
diligently assists clients with the sale and
purchase of real estate within the Turks and
Caicos Islands, focusing on hotel and
commercial developments and residential
property transactions to high net worth clients