TURKS & CAICOS: An Introduction

Overview 2024 

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 benefitted by TCI law being based upon English common law. This sits alongside a significant number of locally enacted TCI-specific statutes.

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 its GDP. TCI continues to experience record numbers of tourists and, directly correlated to this, interest from international real estate investors has never been better, with a slew of new upscale hospitality projects soon to break ground or already under construction. Foreign direct investment is focused primarily in five-star hotels, condominium resorts and managed luxury villa communities. The high demand for low density upscale managed villa developments continues to grow exponentially; however, condominium developments will be the main focus of 2024. The construction industry is expected to grow at approximately 4.5% between 2023 and 2025.

The TCI real estate market had another record-breaking year in 2023, with the Turks and Caicos Real Estate Association recording the highest ever sales volume in a calendar year with over USD768 million in closed real estate transactions, as reported by a local brokerage, The Agency. The bulk of this activity was in TCI’s main commercial and tourist centre, the island of Providenciales, and the main source of interest and activity was from US and Canadian high net worth individuals in the area of luxury villas, which accounted for over USD480 million of the USD768 million recorded. This level of activity is anticipated to continue into 2024, with nearly USD1 billion in pending and conditional transactions.

Investment on the developer side is continuing with several major mixed-used resorts on Providenciales having broken ground or slated to do so imminently, these being: St Regis; Hyatt Andaz; The Loren; and Kempinski Grace Bay. In the meantime, gated villa developments continue to be announced across Providenciales, with construction anticipated to commence in 2024. Demand coupled with lack of luxury inventory on Providenciales (due to the boom in 2022 and 2023) has resulted in driving up prices. A welcome consequence has been the commencement of significant foreign investment in North Caicos, ten miles to the north 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 continuing to make 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 marketplace. This has seen amendments to the companies, trusts and insolvency legislation, all of which were wholly revamped, modernised and largely follow the internationally-successful BVI models. Promotion of TCI’s financial services industry has hitherto largely been handled by the private sector; however, the TCI government has now established and funded a new body, TCI Finance, for that purpose, and so a higher international profile for the local finance sector is imminent.

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 TCI’s financial services regulatory statutes 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. The TCI judiciary is well placed to deal with this.

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

With respect to mediation, the TCI judiciary introduced and brought into force the Court-Connected Rules 2023 which replaced the Court-Connected Mediation Rules. The new rules have created more efficiency on the meditation regime.

Chief Justice Agyemang recently stated that mediation, including specialised family mediation has “taken off”, with the judiciary recording steady successes in this forum. In 2023, 36 cases were referred to mediation from the courts and of these, 20 were concluded, representing 72% of matters referred to mediation.

The availability of these alternative dispute resolution mechanisms 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 more 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 appeal 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.

In response to the needs of a rapidly changing society, 2023 saw many judicial initiatives coming to fruition. These included a new Coroner’s Court, regulations for Justices of the Peace and the digitisation of records and e-filing. These initiatives revolutionise the service delivery, efficiency and accessibility of the court system in TCI.