The Cook Islands is located in the South Pacific Ocean, south of Hawaii.

The country consists of 15 islands spread over 1 million square miles of ocean. The island of Rarotonga is the capital, and home to more than 60% of the population. English is the everyday language.

Originally a colony of Britain, then New Zealand, the Cook Islands achieved limited self-government in 1957, and became “self-governing in free association with New Zealand” in 1965. All Cook Islanders hold dual New Zealand and Cook Islands nationality and the country continues to enjoy a close relationship with New Zealand.

The offshore centre was established in 1981 initially targeting markets in Australasia and driven by merchant banking transactions. In 1989 the Cook Islands became the first country to introduce asset protection laws and it remains the leading jurisdiction for asset protection trusts. This industry now dominates the financial centre.

The Cook Islands International Companies Act 1981 (“ICA”) governs the formation and activities of international companies, otherwise known as IBC’s, Offshore Companies, or Offshore Corporations. The ICA allows companies to be formed and operated with both flexibility and administrative ease. International companies are exempt from all tax in the Cook Islands.

We can incorporate a new company within 24 hours of receipt of our application forms and payment of fees.

Would you like to start a business in the Cook Islands?

Cook Islands provides the highest level of privacy and confidentiality for all foreign investors.

Most important and relevant benefit and advantage to set up your company in Cook Islands, is its very strong asset protection and tax-free environment. There are significant penalties for breach of confidentiality provisions.

Investors often combine a Cook Islands LLC with a Cook Islands international trust for the purposes of asset protection. This is because the Cook Islands offers solid asset protection law, and its banks are also good for depositing funds.

By establishing a Cook Islands Limited Liability Company (LLC), you are taking another step towards financial freedom. All sort of income generated abroad is full tax exempt.

Comparison of features of Cook Islands
International Companies and LLCs

Cook Islands
International Companies and LLCs
Taxation Features

When comparing Cook Islands International Companies (Corporations) and Limited Liability Companies (LLCs) in terms of taxation, both structures offer significant tax benefits, but there are some notable differences in the specifics of their taxation treatment and overall legal frameworks. Here’s a detailed comparison:

1. Cook Islands International Companies
(Corporations)

Cook Islands International Companies are structured to attract international business, and their tax framework is designed to be highly favorable for foreign investors and companies that do not engage in business within the Cook Islands.

Taxation Features:

• Corporate Tax Rate: International Companies (ICs) are typically exempt from Cook Islands income tax, capital gains tax, and withholding tax, as long as they do not conduct business with residents of the Cook Islands or within the jurisdiction itself.
• Tax Reporting Requirements: ICs are not required to file tax returns in the Cook Islands, provided that all income is sourced from outside the Cook Islands.
• Double Taxation: The Cook Islands does not have an extensive network of double taxation treaties, but since ICs are exempt from taxes locally, the concern would only arise in the country where the income is generated or repatriated.
• Stamp Duties and Transfer Taxes: Generally, there are no stamp duties or transfer taxes applicable to ICs conducting international business.
• Withholding Taxes: Dividends, interest, and royalties paid by the company to non-residents are not subject to withholding taxes in the Cook Islands.
• Value Added Tax (VAT) or Goods and Services Tax (GST): Since International Companies are designed for offshore activities, they are not subject to VAT or GST on their activities, provided they do not operate within the Cook Islands.
• Economic Substance Requirements: There are no economic substance requirements for International Companies unless specific provisions under OECD or other global standards apply.

Other Tax Features:

• Shareholders and directors of ICs can be from any nationality.
• The company is designed to be used for international trade, asset protection, and investment holding

2. Limited Liability Company (LLC)

LLCs in the Cook Islands offer flexible structures for foreign investors and businesses, often used in asset protection and offshore planning. LLCs are treated similarly to LLCs in other jurisdictions like the U.S.

Taxation Features:

• Taxation as a Pass-Through Entity: An LLC in the Cook Islands is often treated as a pass-through entity for tax purposes. This means the LLC itself is not taxed; instead, the income or loss is passed on to the members (owners), who are taxed in their own jurisdictions.
• Tax Reporting Requirements: An LLC, if conducting business outside the Cook Islands, is not required to file tax returns locally, similar to International Companies.
• Corporate Tax Rate: Since the LLC is a pass-through entity, it does not pay corporate income taxes in the Cook Islands. Members will pay taxes on the income in their own country, depending on their tax residence.
• Double Taxation: As with International Companies, the Cook Islands does not have an extensive tax treaty network. However, since LLC income is passed through to individual members, double taxation concerns are managed by the members’ tax residence country, depending on its tax laws.
• Withholding Taxes: Like International Companies, LLCs do not face withholding taxes on distributions of profits to non-resident members.
• Stamp Duties and Transfer Taxes: There are generally no stamp duties or transfer taxes imposed on LLC transactions or membership interest transfers in the Cook Islands.
• Economic Substance Requirements: There are no economic substance requirements for LLCs conducting only offshore activities. However, if global regulatory bodies impose such standards, they may need to be considered.

Other Tax Features:

• LLCs offer a high degree of flexibility in terms of management and structure. Members can choose to manage the LLC or appoint a manager.
• LLCs are highly favored in asset protection strategies due to their limited liability for members and robust legal framework in the Cook Islands.

Choosing Between the Two:

1. International Companies (Corporations) are ideal for:
– Businesses seeking a more traditional corporate structure.
– Entities involved in international trade or investments.
– investors looking for a tax-exempt environment without economic substance requirements.

2. Limited Liability Companies (LLCs) are preferred for:
– Individuals or businesses seeking a flexible structure with pass-through taxation.
– Those involved in asset protection and wealth management.
– Businesses that want a less formal management structure compared to a corporation.

Both the Cook Islands International Company and LLC provide significant tax advantages, especially for international operations. However, the LLC is often favored for its simplicity, flexibility, and asset protection benefits, while the International Company is better suited for those needing a more conventional corporate setup.