Cook Islands 2015 : phase 2, implementation of the standard in practice

116 Pages·2015·1.431 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 2: COOK ISLANDS
This report contains a “Phase 2: Implementation of the Standards in Practice” review, as well
as revised version of the “Phase 1: Legal and Regulatory Framework review” already released
for this country. Peer Review Report
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
Phase 2
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 120 jurisdictions which participate in the work of the
Global Forum on an equal footing. Implementation of the Standard
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These in Practice
standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Pe
Convention on Income and on Capital and its commentary as updated in 2004, which has er R COOK ISLANDS
been incorporated in the UN Model Tax Convention. e
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The standards provide for international exchange on request of foreseeably relevant w
R
information for the administration or enforcement of the domestic tax laws of a requesting e
p
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must o
r
be provided, including bank information and information held by fi duciaries, regardless of the t P
h
existence of a domestic tax interest or the application of a dual criminality standard. as
e
All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum as 2 Im
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 p
reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange lem
of information, while Phase 2 reviews look at the practical implementation of that framework. en
Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. tatio
The ultimate goal is to help jurisdictions to effectively implement the international standards n
o
of transparency and exchange of information for tax purposes. f th
All review reports are published once approved by the Global Forum and they thus represent e S
agreed Global Forum reports. ta
n
d
For more information on the work of the Global Forum on Transparency and Exchange of ard
Information for Tax Purposes, and for copies of the published review reports, please visit in
www.oecd.org/tax/transparency and www.eoi-tax.org. Pra
c
tic
e
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Consult this publication on line at http://dx.doi.org/10.1787/9789264231450-en. K
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and A
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statistical databases. D
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Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-23144-3
9HSTCQE*cdbeed+
23 2015 06 1 P

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Cook Islands 2015
PHASE 2:
IMPLEMENTATION OF THE STANDARD IN PRACTICE
March 2015
(reflecting the legal and regulatory framework
as at December 2014)
ThisworkispublishedontheresponsibilityoftheSecretary-GeneraloftheOECD.
Theopinionsexpressedandargumentsemployedhereindonotnecessarilyreflect
theofficialviewsoftheOECDorofthegovernmentsofitsmembercountriesor
thoseoftheGlobalForumonTransparencyandExchangeofInformationforTax
Purposes.
Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatusof
orsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersand
boundariesandtothenameofanyterritory,cityorarea.
Pleasecitethispublicationas:
OECD(2015),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer
Reviews:CookIslands2015:Phase2:ImplementationoftheStandardinPractice,OECDPublishing.
http://dx.doi.org/10.1787/9789264231450-en
ISBN978-92-64-23144-3(print)
ISBN978-92-64-23145-0(PDF)
Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews
ISSN2219-4681(print)
ISSN2219-469X(online)
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TABLE OF CONTENTS – 3
Table of Contents
About the Global Forum                                             5
Executive Summary                                                 7
Introduction                                                       11
Information and methodology used for the peer review of Cook Islands       11
Overview of Cook Islands                                           12
Recent developments                                               19
Compliance with the Standards                                       21
A. Availability of Information                                        21
Overview                                                        21
A1 Ownership and identity information                               23
A2 Accounting records                                            57
A3 Banking information                                           68
B. Access to Information                                            73
Overview                                                        73
B1 Competent Authority’s ability to obtain and provide information        74
B2 Notification requirements and rights and safeguards                  82
C. Exchanging Information                                          85
Overview                                                        85
C1 Exchange of information mechanisms                              86
C2 Exchange of information mechanisms with all relevant partners         93
C3 Confidentiality                                                94
C4 Rights and safeguards of taxpayers and third parties                  97
C5 Timeliness of responses to requests for information                   98
PEER REVIEW REPORT – PHASE 2 – COOK ISLANDS © OECD 2015
4 – TABLE OF CONTENTS
Summary of Determinations and Factors Underlying Recommendations   103
Annex 1: Jurisdiction’s response to the review report                   107
Annex 2: List of all exchange of information mechanisms                108
Annex 3: List of all laws, regulations and other material received         109
Annex 4: List of authorities interviewed                               111
PEER REVIEW REPORT – PHASE 2 – COOK ISLANDS © OECD 2015
ABOUT THE GLOBAL FORUM – 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for
Tax Purposes is the multilateral framework within which work in the area
of tax transparency and exchange of information is carried out by over
120 jurisdictions, which participate in the Global Forum on an equal footing
The Global Forum is charged with in-depth monitoring and peer
review of the implementation of the international standards of transpar-
ency and exchange of information for tax purposes These standards are
primarily reflected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commen-
tary as updated in 2004 The standards have also been incorporated into
the UN Model Tax Convention
The standards provide for international exchange on request of fore-
seeably relevant information for the administration or enforcement of the
domestic tax laws of a requesting party Fishing expeditions are not authorised
but all foreseeably relevant information must be provided, including bank
information and information held by fiduciaries, regardless of the existence
of a domestic tax interest or the application of a dual criminality standard
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed This process is
undertaken in two phases Phase 1 reviews assess the quality of a jurisdic-
tion’s legal and regulatory framework for the exchange of information, while
Phase 2 reviews look at the practical implementation of that framework Some
Global Forum members are undergoing combined – Phase 1 and Phase 2 –
reviews The Global Forum has also put in place a process for supplementary
reports to follow-up on recommendations, as well as for the ongoing monitor-
ing of jurisdictions following the conclusion of a review The ultimate goal is
to help jurisdictions to effectively implement the international standards of
transparency and exchange of information for tax purposes
All review reports are published once approved by the Global Forum
and they thus represent agreed Global Forum reports
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the pub-
lished review reports, please refer to wwwoecdorg/tax/transparency and
wwweoi-taxorg
PEER REVIEW REPORT – PHASE 2 – COOK ISLANDS © OECD 2015

ExECUTIVE SUMMARy – 7
Executive Summary
1 This report summarises the legal and regulatory framework for trans-
parency and exchange of information (EOI) in the Cook Islands as well as the
practical implementation of that framework The assessment of effectiveness
in practice has been performed in relation to a three-year period (1 July 2010
to 30 June 2013) The international standard which is set out in the Global
Forum’s Terms of Reference to Monitor and Review Progress Towards
Transparency and Exchange of Information, is concerned with the availability
of relevant information within a jurisdiction, the competent authority’s ability
to gain timely access to that information, and in turn, whether that informa-
tion can be effectively exchanged with its exchange of information partners
2 The Cook Islands’ economy is mainly driven by tourism, with
international financial services making a contribution corresponding to
approximately 32% of Gross Domestic Product Until 1965, the Cook Islands
was a dependent territory of New Zealand, with whom they retain strong
legal and commercial links Other important trading partners are Australia
and Fiji The Cook Islands is self-governing in free association with New
Zealand, with full law-making powers and full capacity to enter into inter-
national agreements
3 Relevant legal entities and arrangements for the purposes of this
report comprise companies, partnerships and trusts, which are divided into
domestic and international entities or arrangements, as well as foundations
There are sufficient commercial and tax obligations in place to ensure the
availability of ownership information concerning domestic and foreign enti-
ties and arrangements Anti-money laundering obligations and the governing
legislation of all international entities and foundations ensure the availabil-
ity of ownership information with regard to these entities Enforcement of
these provisions is secured by the existence of significant penalties for non-
compliance and comprehensive systems for monitoring compliance with all
relevant obligations
4 The Cook Islands’ commercial and tax laws contain obligations to
keep reliable accounting records, including underlying documentation, for at
least five years in respect of domestic and foreign companies, partnerships
PEER REVIEW REPORT – PHASE 2 – COOK ISLANDS © OECD 2015
8 – ExECUTIVE SUMMARy
and trusts Obligations were introduced in December 2013 such that inter-
national entities and arrangements must maintain accounting records in
the Cook Islands for at least six years However, it is not clear that the new
obligations require that all underlying source documents be maintained
for all of these entities and arrangements, and accordingly a recommenda-
tion is included to clarify this The same applies in respect of foundations,
which were introduced in 2012 Financial institutions in the Cook Islands are
required to keep all records pertaining to the accounts held by them, as well
as related financial and transactional information
5 As to access to information, the competent authority of the Cook
Islands is invested with broad and effective powers to gather relevant infor-
mation These powers are exercised predominately by issuing notices to
require the production of relevant information and are complemented by
powers to search premises and seize information as well as to compel oral
testimony Secrecy provisions in domestic laws are overridden where infor-
mation is required for exchange of information purposes, and a domestic
tax interest requirement is excluded Moreover, these access powers are
not restricted by prior notification requirements In practice, the competent
authority has exercised its powers to access information in a timely and effi-
cient manner
6 Since 2009, the Cook Islands has an emerging network of tax infor-
mation exchange agreements (TIEAs), comprising 18 TIEAs signed to date,
of which fourteen have since entered into force Negotiations are currently
in progress with an additional seven jurisdictions The agreements generally
follow the OECD Model TIEA, and meet the international standard in all
respects
7 The Cook Islands’ practical experience with exchanging information
is positive During the review period the Cook Islands received five requests
from two partners The Competent Authority named in the Cook Islands
TIEAs is the Collector of the Revenue Management Division (RMD), which
is a division of the Ministry of Finance and Economic Management The
Cook Islands EOI unit is well organised and sufficiently resourced, and the
Competent Authority and professional staff working on EOI have appropriate
expertise and clear responsibilities A clear procedure exists and is followed,
which covers all relevant steps in the EOI process The policies and practices
with respect to confidentiality are also sound The peer inputs received from
the Cook Islands’ treaty partners are very positive, with peers reporting that
all requests have been answered appropriately and in a timely manner
8 The Cook Islands has been assigned a rating for each of the
10 essential elements as well as an overall rating The ratings for the essen-
tial elements are based on the analysis in the text of the report, taking into
account the Phase 1 determinations and recommendations made in respect of
PEER REVIEW REPORT – PHASE 2 – COOK ISLANDS © OECD 2015