Taxation in the Cook Islands

TAXATION

In the Cook Islands there is no capital gains tax, inheritance tax or estate duty, capital transfer tax, gifts tax or wealth tax.

The main taxation on individuals is income tax at a maximum rate of 30%. There is VAT at 12.5%, there is Stamp Duty on some official transactions, and there are import duties.

These are levied at rates specified by law in 18 bands ranging from 0%–150% percent, with an average effective rate of slightly over 10% on the cif (cost plus insurance plus freight) value of all imported goods.

The government had lifted most import levies from July 1, 2006, although duties on pork, fresh fruit, vegetables, pearls, soft drinks, motor vehicles, liquor, tobacco and fuel remain in place.

Duties on these items were, however, due to be cut by 50% on July 1, 2008. Further reductions will be subject to review.

Cook Islands Income Taxation

Income tax is payable by those residing and working in the Cook Islands and is levied on a sliding scale as follows:

N.B. The NZD10,000 Taxation Exemption is for a full year of residence in the Cook Islands. The exemption is apportioned to days resident for individuals who have not been resident for a full year. Non residents do not receive the exemption, the rate of tax on earnings derived in the Cook Islands is 20 cents in the dollar for the first NZD4000, 25 cents in the dollar between NZD4001 and NZD24,000 and 30 cents in the dollar for every dollar over NZD24,000 pa.

Trust income tax rates are as follows:

• NZD0 to NZD4,000 - 20%
• NZD 4,001 to NZD24,000 - 25%
• NZD24,001 and above - 30%


Provisional tax is required to be paid by any taxpayer who in any income year derives assessable income other than from source deduction payments and their tax payable on the assessable income is over NZD1,000.

Payments of provisional tax are due in two equal installments during the income year. On a standard balance date of December 31 the installments are due on June 1 and December 1 respectively. The total amount of provisional tax payable is the terminal tax calculated in the preceding year, however provisional tax can be estimated in some circumstances.

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