Doing Business In.. 2024 Comparisons

The foundation of law in the Turks and Caicos Islands (TCI) is its written Constitution, and the islands have a common law legal system. As a British Overseas Territory, the majority of its legal influence is the laws of England and Wales. It remains subject to the UK’s international obligations (such as United Nations conventions – for example, on asylum and refugee issues).

The TCI has its own Magistrate’s Courts, Supreme Court, and Court of Appeal. The two lower courts sit primarily in two of the islands (Providenciales and Grand Turk) and the Court of Appeal in Providenciales when not sitting remotely. The final appellate court remains the Judicial Committee of the Privy Council in London, England. Claims in respect of rights and freedoms as guaranteed under Part 1 of the Constitution have a right of appeal, subject only to not being frivolous.

There is generally no restriction on foreign investment. Foreign investments in private enterprises in the TCI are not treated any differently from domestic investments. However, local business licensing laws will apply in relation to certain types of businesses. Certain categories of business are protected and require local (Turks and Caicos Islander) ownership of at least 50% of the equity of the relevant entity.

Investments in the financial services sector such as banking, insurance or investment management are subject to regulation by the Financial Services Commission (FSC), and the approval typically includes meeting capital adequacy requirements, demonstrating compliance with anti-money laundering regulations and obtaining necessary licences or permits.

Large-scale development projects such hotels/resorts and marinas require approval from government departments such as the Department of Planning, Environmental Health Department, Business Licence Department and/or Department of Environment and Coastal Resources, as applicable. Each relevant department will have its own set of criteria (some of which will be detailed in the respective ordinance, such as the Physical Planning Ordinance) depending on the specifics of the project. The criteria for approval may involve conducting environmental impact assessments, following sustainable development principles, adhering to building codes and standards, consulting with local communities, or demonstrating the economic benefit the investment will bring to the TCI, such as job creation, employment of locals, technology transfer or contribution to local infrastructure development.

Invest TCI is a statutory body that is specifically commissioned and mandated to promote and facilitate foreign investment in the TCI. Although its involvement is not required for private self-funded investments, it is to Invest TCI that applications for development agreements are made where government incentives and concessions are being requested for a project. It provides pivotal support in navigating government interactions and streamlining the investment process by working across government agencies.

There is no general foreign investor approval process as there is no general restriction on foreign investments.

Where a development agreement is sought, an application is made to Invest TCI in the form of a Business Proposal, and all of the proposed parties to the development agreement will need to provide due diligence materials to Invest TCI for vetting.

Where the TCI government enters a Development Agreement granting concessions/incentives to a project, the government will typically require certain commitments such as employment of a number of locals in key positions of that establishment, the development and/or maintenance of specific community infrastructure projects such as creation and or upkeep of a park, maintenance of a government school, etc.

If a government department does not authorise an investment, there is usually an appeal procedure to follow, which would be outlined in the relevant ordinance. The timing of an appeal will vary across each government department/agency and by the nature of the decision. If the outcome of the appeal is not satisfactory to the investor, there can sometimes be scope to apply for a judicial review of the denial, an area of legal work that requires specialist skills.

The most common types of corporate vehicles available in the TCI are:

1. Domestic Company

A company is considered to be a domestic company if it is formed and conducts business in the TCI. The liability of such companies can be limited or unlimited; they can be authorised to issue shares or be limited by guarantee. There is no minimum or maximum share capital requirement, and the share capital may be unlimited. In practice, we most frequently see a share capital of USD5,000. A domestic company requires a minimum of one shareholder and one director (who can be the same person). This type of company is best suited for any venture that is for profit.

2. Foreign Company

If a foreign company (being a body corporate that has been incorporated outside of the TCI), wishes to carry on business in the TCI, it may do so without incorporating a TCI entity. To do so, the foreign company can apply to the Registrar of Companies to be registered in the Register of Foreign Companies.

3. Limited Partnership

This vehicle does not have the usual shareholder and director requirements but has at least one general partner (who is involved in the day-to-day running of the business and has unlimited liability) and at least one limited partner (who is not involved in the day-to-day and whose liability is limited to their investment). This structure is best suited for various investors pooling their resources to purchase a large investment.

4. Non-profit Corporation

The liability is always limited; it can be authorised to issue shares or be limited by guarantee. As for domestic companies, there is no minimum share capital, a minimum shareholder requirement of one person and a minimum director requirement of two. This structure is best suited for any matters of a non-profit nature such as religious and charity organisations.

5. Protected Cell Company

This is a corporate structure in which one entity consists of a core and of separate and distinct cells, each with assets and liabilities that are separated and protected from those of the others. This type of structure is used by insurance companies to underwrite insurance risks.

The main steps of incorporation of a company in the TCI are as follows:

1. Name reservation: Complete a name reservation form at the FSC providing three potential names in order of priority. Once a name has been cleared, it can be reserved for three months.

2. Preparation of articles of incorporation: These can be basic or detailed, and require share capital to be detailed and are required to state whether the company will be limited or unlimited by shares or guarantee.

3. Compliance measures must be met ahead of incorporation, which requires completion and submission of due diligence forms for all directors and shareholders, including corporate owner(s) or in a trust structure.

Provided the above steps have been completed and all supporting documents have been provided, incorporation can take place generally within three days of submission to the Companies Registry.

All private companies in the TCI are subject to reporting and disclosure obligations. A notice of any change of name, shareholders, directors or articles of incorporation must be filed at Companies Registry, and failure to do so in accordance with the timeframe specified by the ordinance may result in the FSC imposing a penalty. Beneficial ownership details are also required to be filed. There are no annual returns and no requirements to file financial statements.

Non-profits share the same requirements as private companies with the exception of being required to file financial details annually.

Although a register of limited partners and their contribution percentages must be kept on the company’s books, those details are not required to be filed at the Companies Registry. However, details of all beneficial owners are so required.

The most common legal entities in the TCI are as follows, each of which follows a one-tier framework:

1. Private companies limited by shares: This is the most prevalent structure in the TCI. The management is handled by a board of directors, which is responsible for both the strategic direction and operational management of the company. Directors are appointed by the shareholders, who are the ultimate owners of the company. Shareholders can also serve as directors, should they choose. Although no longer mandatory under TCI company law, it is advisable to appoint a company secretary to maintain good corporate governance.

2. Partnerships: Partnerships, including limited partnerships, follow a partner-managed structure. General partners manage the partnership and are responsible for its operations and decisions. In a limited partnership, limited partners contribute capital but do not participate in management, limiting their liability to the extent of their investment.

3. Non-profit organisations: Although these have a one-tier structure, they can also have advisory boards. Nonetheless, the most common framework is to have a board of directors that oversees the organisation’s activities, ensuring it meets mission and regulatory requirements. Directors are usually volunteers and are responsible for strategic planning and oversight.

The liability of directors and officers of a TCI company is governed by rules and principles derived from common law and the Companies Ordinance. They impose a fiduciary duty on each director to act honestly, in good faith and in what the director believes to be in the best interest of the company. Directors also have an obligation to exercise a reasonable degree of care, skill and diligence, a standard that is measured against what a reasonably diligent person with the same knowledge and experience would exercise – acting with a level of competence expected of someone in their position.

The concept of “piercing the corporate veil” exists in the TCI as in other common law jurisdictions. This principle allows the court to disregard the separate legal personality of the company and hold the shareholders or directors personally liable for the company’s obligations in certain circumstances. However, this is an exceptional measure for instances such as fraud or misconduct where the company is used as a vehicle for fraudulent or wrongful activities or in cases where directors or shareholders have conducted business in an improper or dishonest manner. This legal framework aims to ensure that directors and officers act responsibly and in the best interests of the company while providing mechanisms to deter and address serious misconduct.

In the TCI, the employer/employee relationship is primarily governed by the Employment Ordinance.

Although contracts may modify or amend the requirements set out by ordinance, they generally cannot do so to the detriment of an employee. Employment agreements must generally be in writing and set out certain specified information as required by the ordinance. However, in the absence of a written contract, a verbal contract may be found and upheld.

The enforcement of the Employment Ordinance is in the hands of the Labour Department with respect to employer compliance with the ordinance and the issuance of fines and other sanctions for non-compliance. The Labour Department has broad powers to facilitate compliance, including, for example, to request documents from employers, which requests employers cannot refuse.

The Labour Department is also employees’ first stop for recourse in the event they have a grievance with their employer that cannot be resolved within the organisation. If a dispute is lodged with the Labour Department and not resolved, an employee can choose to file a claim with the Labour Tribunal, which operates similarly to a court but is not bound by the rules of the TCI courts.

Appeals from the Labour Tribunal go to the Turks and Caicos Islands Court of Appeal and, ultimately, though rarely, to the Privy Council in England. The interpretation of the Employment Ordinance is governed primarily by case law from the Court of Appeal, although the Labour Tribunal may use its own historical precedents to assist in the interpretation of the ordinance. The Tribunal may also consider cases from the UK and other jurisdictions to be persuasive, although not binding.

The Employment Ordinance requires employers to provide employees with written employment contracts within seven days of their start date, and for parties to sign the contract within 14 days thereafter.

However, the absence of a written contract does not invalidate the employment, and a verbal contract will instead be found to be in place.

The issue with verbal contracts is that it is much less clear where the contract deviates from the Employment Ordinance to an employer’s benefit. For that reason, unless the parties agree on a specific term, or there is evidence that they operated on the basis of that term, the Labour Tribunal will likely apply the employee-friendly default terms and obligations specified in the ordinance.

For example, an employment contract will be found to be permanent in duration unless it is specifically agreed, usually in writing, to be for a fixed term.

For contracts in writing, the Employment Ordinance requires they contain at least: identification of the parties; the date employment began; the date on which the employee’s period of continuous employment began, taking into account employment with a previous employer which counts towards that period; details of remuneration and frequency of pay; hours of work; entitlement to holidays and sick days, and pay related to same; whether the employee is entitled to a pension; agreed notice periods; job duties; disciplinary and grievance procedures; and the date the contract expires (if for a fixed term).

For hourly employees, overtime must be paid once an employee reaches 44 hours per week. That number can be reduced, but not increased, by contract.

For salaried employees, they can either be subject to the maximum 44 hours per week as are hourly employees, or by contract it can be specified that they are not subject to regular working hours and are instead paid on the basis of the work they perform. In that case, the salaried employee will be exempt from overtime restrictions.

The TCI does not permit “at will” termination. That means, in order to terminate an employee’s employment, the employer must have a “valid” reason for termination. A valid reason, if properly documented, may include: performance issues for which the employee has been given three months to correct; misconduct which is repeated within six months; serious misconduct which might warrant immediate dismissal, for example, violence in the workplace; or redundancy, such as when all or part of a business is shut down.

Even the failure to renew a fixed-term contract may constitute dismissal, unless the employee is a work permit holder and specific waivers are given.

There are statutory minimum notice periods for terminating an employee’s contract even with a “valid” reason, and which are based on the length of the employee’s service. Those periods can be expanded, but not reduced, by contract.

If an employer terminates an employee for any invalid reason, called “unfair dismissal”, the employer will still be liable to the employee for the notice period or pay in lieu of notice, as well as being liable upon claim by the employee to the Labour Tribunal for payment of a basic award and a compensatory award. The basic award is a statutory calculation, similar to notice pay but paid in addition to notice pay, which is an award based on the employee’s length of service. The compensatory award is intended to compensate employees for losses they sustained as a result of their termination (and punish employers for wrongdoing). The compensatory award is paid at the discretion of the Labour Tribunal and is usually capped at USD35,000. That cap is waived in circumstances of discrimination.

As mentioned above, a redundancy may be a reason for a “valid” termination of employment. However, when terminating for reason of redundancy, employers should be aware that there are additional payment obligations. In addition to notice pay, employees with over two years of service with a particular employer and who are made redundant will be owed a statutorily calculated amount of severance pay based on their years of service.

Although the Employment Ordinance contains provisions relating to collective bargaining and unions, and protection for employees related to same, there are in reality no unions in the jurisdiction.

When disciplining employees, management has an obligation to ensure employees understand what they are being disciplined for and to provide copies of any written disciplinary warnings or other actions. Employees also have the right to appeal any disciplinary action against them internally within the organisation. In practice, that is only useful when the employer is a large organisation to which the matter can be escalated to a higher level of management. For small organisations, the opportunity to appeal is rarely exercised or given (although it legally must be).

If an employer intends to make an employee (or employees) redundant, they have an obligation to first speak with the employee to determine whether alternatives to redundancy can be found, including alternative positions within the same organisation. In circumstances of redundancy, the employer has an obligation prior to making the employee redundant to inform the trade union or the employee’s representative as soon as possible. However, as mentioned above, there are no unions in the TCI and therefore no employee representatives at most organisations. It is the employees themselves who will be notified and consulted with respect to redundancy.

In bringing a claim to the Labour Tribunal, an employee may choose to be represented by an attorney or otherwise, but there is no obligation for either employees or employers to have any such representation.

The TCI does not have an income tax regime for individuals or corporations. However, corporations may be subject to other fees and taxes as addressed below.

Employees are subject to mandatory deductions for payment of National Insurance Board (social security, pensions, etc) and National Health Insurance Board (socialised medicine). The NIB contributions to be paid by each of the employer and the employee were recently increased effective 1 April 2024 and currently sit at 6.5% employer contribution and 5.5% employee contribution. The NHIP (National Health Insurance Plan) contributions are 6%, split evenly between employees and employers, with a cap on contributions where an employee makes in excess of USD7,800 per month.

Currently, there are no corporate, income or capital gains tax in the TCI. However, there are other local taxes and fees that businesses must pay, which include:

1. Business licence fees: All businesses are required to obtain a business licence and pay an annual fee. The fee varies depending on the type and size of the business.

2. Business/company registration fees: All businesses, whether sole trader or body corporate, are subject to annual registration fees.

3. Work permit fees: Companies employing expatriates must pay for work permits, the cost of which varies by job type and length of employment.

4. Customs duties: Import duties are levied on goods brought into the TCI. These vary generally from 5% to 45% depending on the type of goods imported. All goods are currently subject to a mandatory processing fee of 7.5%.

5. Stamp duty: Land transfers are subject to stamp duty, which ranges from 6.5% to 10% depending on the value and location of the property.

6. Accommodation tax: A tax of 12% is applied to the gross revenue of accommodations such as hotels, villas, guesthouses and any other transient guest lodgings. This tax is typically passed on to guests.

7. Service charge: Many restaurants charge a 10% service charge. If this is charged, restaurants have a statutory requirement to distribute it (in full) among its staff.

At present, the TCI has not implemented Pillar Two of the Organisation for Economic Co-operation and Development framework, which focuses on establishing a global minimum corporate tax rate of 15%. Although this structure continues to be adopted by many countries around the world, its implementation requires legislative changes that the TCI has not yet made.

Tax credits and tax incentives are not offered in the TCI.

Tax consolidation is not available in the TCI.

Thin capitalisation rules do not apply in the TCI.

Transfer pricing rules do not apply in the TCI.

There are no anti-evasion rules in the TCI.

There are no merger controls in place in the TCI.

As there are no merger controls in the TCI, there are no protocols relating to same.

There are no rules governing anti-competitive agreements and practices in the TCI.

There are no rules governing unilateral conduct and economic dependency in the TCI.

A patent is a form of intellectual property that grants an inventor or their assignee exclusive rights to make, use, sell and distribute an invention for a limited period. Patents in the TCI are governed by the Patents Ordinance, which requires a patent to be granted in the UK and registered in the TCI within five years from the date of grant of the patent.

To register a patent in the TCI, one must complete and submit the prescribed application form (as set out in the ordinance) to the Registrar of Patents for registration. It must be accompanied by payment of the prescribed fee and a copy of the specification, together with the drawings (if any) relating to the patent and a certificate of the UK Comptroller-General of Patents, Designs and Trade Marks, giving full particulars of the grant of the patent or of its taking effect in the UK. Upon receipt of an application that has been complied with to the satisfaction of the Registrar, the Registrar will advertise the application in the Gazette for two months and, provided that there is no opposition from the public, issue a certificate of registration of the patent. UK patents are typically granted for a period of five years, are renewable for five-year periods and have a lifespan of 20 years. A patent that is registered in the TCI shall continue in force as long as it remains in force in the UK.

No action for infringement of a patent in the TCI can be entered into prior to the date of issuance of a certificate of registration. Remedies are based on UK remedies for infringement, which include injunctions, damages (or an account of profits), and delivery up or destruction of the infringing products.

The Trade Marks Ordinance in the TCI defines a trade mark as “any sign capable of being represented graphically which is capable of distinguishing the goods or services of one undertaking from those of other undertakings and it may, in particular, consist of words (including personal names), designs, numerals, letters or the shape of goods or their packaging”. Trade marks are registered for a period of ten years from the date of registration and are renewable for further periods of ten years subject to payment of the prescribed renewal fee.

For a trade mark to be protected it must be registered at the Companies Registry. To register a trade mark, an application for registration must be filed with the Registrar, who will examine whether it satisfies the requirements of the ordinance and regulations. Once accepted, the Registrar will cause the application to be published in the Gazette in the prescribed manner, and the public is given a period of one month from the date of publication of the application to provide a notice of opposition. If the Registrar does not receive notice of any matters that may require the application to be withdrawn, the Registrar will proceed to register the trade mark, after payment of the prescribed fee. Infringement proceedings may be brought by the proprietor of the trade mark, who may seek remedies such as damages, injunctions, accounts of profit, order for delivery up of infringing goods, or otherwise that may be available to him in respect of a breach by a third party using the trade mark without consent.

The TCI does not have industrial design legislation.

Copyright is a legal concept that grants the creator of an original work exclusive rights to its use and distribution, usually for a limited time, with the aim of enabling the creator to receive compensation for their intellectual investment. This protection covers various types of works, including literary, dramatic, musical and artistic creations, as well as films, sound recordings and broadcasts. The UK’s Copyright Act 1911 applies to the TCI. Copyright protection is automatic, does not require registration and lasts for 50 years after the death of the creator. Enforcement of and available remedies for copyright are similar to that for patents and trade marks.

There are no laws protecting IP rights such as software, databases and trade secrets in the TCI.

There are currently no applicable regulations on data protection.

As there are no data protection ordinances or regulations in the TCI, common law rules will apply.

As the TCI has no data protection rules, there is no body or organisation that oversees data protection.

Corporate

The Beneficial Ownership Information Register (BO Register) was introduced in the TCI as part of a broader effort to enhance financial transparency and comply with international standards. The implementation of the registry aligns with the global push to combat financial crimes such as money laundering and tax evasion. Specifically, the BO Register was established through the incorporation of specific provisions into the Companies Ordinance 2017, such provisions taking effect on 26 June 2017. This legislation requires all legal entities incorporated in the TCI to maintain and disclose accurate information about their beneficial owners, such information to be uploaded to the database of the BO Register and kept outside the public domain – the only disclosure requirement being to persons or authorities such as the Royal Turks and Caicos Islands Police Force or other regulatory authorities.

Prior to the enactment of this legislation, there were discussions about the implementation of a public beneficial ownership registry. This proposal was met with major resistance from regional leaders of offshore financial centres such as the BVI and the Cayman Islands, citing various concerns primarily in relation to privacy issues, potential economic impact, competitive disadvantage, legal and constitutional issues, international standards and pressure, and arguing that the push for public beneficial ownership registries should be part of a global standard rather than being implemented unilaterally or in a piecemeal fashion. They contended that a co-ordinated international approach would ensure a level playing field and more effectively combat financial crimes. As a compromise, the result was a beneficial ownership database that is accessible to law enforcement and regulatory authorities (upon request) and not the general public. This met international requirements without the need for public disclosure.

In recent times, there have since been re-emerging discussions in the company managers space relating to the implementation of a public beneficial ownership registry (by the global powers that be) in the year 2025. However, nothing tangible has surfaced to date and the industry continues to await the next wave of proposed changes.

Employment

Although there are no planned legislative revisions to the Employment Ordinance, the interpretation of that ordinance is constantly being verified and modernised though decisions of the Labour Tribunal and by appeals to the TCI Court of Appeal. For example, a December 2023 Court of Appeal decision confirmed that in circumstances of wrongful termination the employee’s awards of compensation are to be calculated on the basis of the hours actually worked during the employee’s employment, to avoid employees being awarded a windfall by reason of their termination. Before that decision, the Labour Tribunal was awarding damages based on the maximum contractual hours.

That decision also changed the procedure by which the Labour Tribunal hears employment disputes. It required the Labour Tribunal to be more open in its process, requiring that parties have an opportunity to know and respond to the case against them by the other side.