Table Of ContentGlobal Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: COOK ISLANDS
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 100 jurisdictions which participate in the work of the Global Peer Review Report
Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation Phase 1
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange of Legal and Regulatory Framework
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant COOK ISLANDS
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 fi duciaries, regardless of the Pe
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existence of a domestic tax interest or the application of a dual criminality standard. r R
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All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum as ie
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reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange ep
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All review reports are published once approved by the Global Forum and they thus represent a
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Please cite this publication as: rk C
OECD (2012), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer O
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Reviews: Cook Islands 2012: Phase 1: Legal and Regulatory Framework, OECD Publishing. K
http://dx.doi.org/10.1787/9789264178120-en IS
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical N
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databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information. S
ISBN 978-92-64-17811-3 -:HSTCQE=V\]VVX:
23 2012 17 1 P
232012171cov.indd 1 14-Jun-2012 1:48:09 PM
Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Cook Islands 2012
PHASE 1
June 2012
(reflecting the legal and regulatory framework
as at April 2012)
This work is published on the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of the OECD or of the governments of its
member countries or those of the Global Forum on Transparency and Exchange
of Information for Tax Purposes.
This document and any map included herein are without prejudice to the status
of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2012), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
Reviews: Cook Islands 2012: Phase 1: Legal and Regulatory Framework, OECD Publishing.
http://dx.doi.org/10.1787/9789264178120-en
ISBN 978-92-64-17811-3 (print)
ISBN 978-92-64-17812-0 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)
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3
TABLE OFCONTENTS –
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Information and methodology used for the peer review of Cook Islands . . . . . . . 9
Overview of Cook Islands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
A.1.Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
A.2.Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
A.3.Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
B. Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
B.1. Competent Authority’s ability to obtain and provide information. . . . . . . . 50
B.2.Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 54
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
C.1.Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
C.2.Exchange of information mechanisms with all relevant partners . . . . . . . . 62
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
C.4.Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 65
C.5.Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 67
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – COOK ISLANDS © OECD 2012
4
– TABLE OFCONTENTS
Summary of Determinations and Factors UnderlyingRecommendations. . . . 69
Annex 1: Jurisdiction’s Response totheReview Report . . . . . . . . . . . . . . . . . . 73
Annex 2:List of All Exchange-of-Information Mechanisms. . . . . . . . . . . . . . . 75
Annex3:List of all Laws, Regulations andOtherMaterialReceived. . . . . . . 76
Annex4: Overview of Laws and Other Relevant Factors for Exchange of
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – COOK ISLANDS © OECD 2012
5
ABOUT THE GLOBAL FORUM –
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 100 jurisdic-
tions, 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 transparency 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 Article26 of the OECDModel Tax Convention on
Income and on Capital and its commentary as updated in 2004.The standards
have also been incorporated into the UNModel 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 author-
ised but all foreseeably relevant information must be provided, including
bank information and information held by fiduciaries, regardless of the exist-
ence of a domestic tax interest.
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 juris-
diction’s legal and regulatory framework for the exchange of information,
while Phase 2 reviews look at the practical implementation of that frame-
work. Some Global Forum members are undergoing combined – Phase 1
and Phase2 – 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 monitoring 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 adopted by the Global Forum.
For more information on the work of the Global Forum on Transparency and
Exchange of Information for Tax Purposes, and for copies of the published review
reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – COOK ISLANDS © OECD 2012
7
EXECUTIVE SUMMARY –
Executive Summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in the Cook Islands. The inter-
national 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 information can be effectively
exchanged with its exchange of information partners.While the Cook Islands
has a developed legal and regulatory framework, the report identifies a
number of areas where the Cook Islands could improve its legal infrastruc-
ture to more effectively implement the international standard. The report
includes recommendations to address these shortcomings.
2. The Cook Islands’ economy is mainly driven by tourism, with
international financial services making the second largest contribution cor-
responding to approximately 8% of Gross Domestic Product. Until 1965,
the Cook Islands was a dependent territory of New Zealand and they retain
strong legal and commercial links to date.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 international agreements.
3. Relevant entities and arrangements comprise companies, partner-
ships and trusts, which are divided into domestic and international entities or
arrangements. There are sufficient commercial and tax obligations in place
to ensure the availability of ownership information concerning domestic and
foreign entities and arrangements.Anti-money laundering obligations apply
to ensure the availability of ownership information with regard to all inter-
national entities, but insufficient obligations have been identified to ensure
the availability of ownership information with respect to international trusts.
Enforcement of these provisions is secured by the existence of significant
penalties for non-compliance.
4. The Cook Islands’ commercial and tax laws contain obligations to
keep reliable accounting records, including underlying documentation, for at
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – COOK ISLANDS © OECD 2012
8
– EXECUTIVE SUMMARY
least five years in respect of domestic and foreign companies (except when
liquidated), partnerships and trusts.However, most of the accounting records
requirements applicable to international entities and arrangements fail to
meet the international standard. 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.
6. Since 2009, the Cook Islands has an emerging network of tax infor-
mation exchange agreements (TIEAs), comprising 16 TIEAs signed to date,
all of which are based on and closely follow the OECD Model TIEA. New
implementing legislation was introduced in 2011 and eleven of the TIEAs
have since entered into force. Negotiations are currently in progress with
an additional eight jurisdictions, These TIEAs allows for tax information
exchange to the standard with its relevant partners. The agreements gener-
ally follow the OECD Model TIEA, and meet the international standard in
all respects.The new legislation also specifically overrides any obligation to
secrecy that may be imposed by any Act.
7. Cook Islands’ response to the recommendations in this report, as
well as the application of the legal framework to the practices of its com-
petent authority will be considered in detail in the Phase 2 Peer Review of
Cook Islands which is scheduled for the first half of 2014. In the meantime,
a follow up report on the steps undertaken by the Cook Islands to answer the
recommendations made in this report should be provided to the PRG within
six months of the adoption of this report.
PEER REVIEW REPORT – PHASE1: LEGAL AND REGULATORY FRAMEWORK – COOK ISLANDS © OECD 2012
