Cook Islands: Ministry of Finance

Cook Islands Ministry of Finance News

Signing of TIEA between Cook Islands & the Czech Republic

Earlier this month the Prime Minister, the Honourable Henry Puna signed the Cook Islands' 19th Tax Information Exchange Agreement (“TIEA”) with the Czech Republic in Auckland. This signing, in addition to the news that Italy have recently ratified our TIEA with them, signify further progress by the Cook Islands in meeting its international tax obligations.

The signings were an important step for the Cook Islands to demonstrate its international cooperation on tax matters and to the principles of transparency and effective exchange of information. The entering into of this agreement is further evidence of the Cook Islands’ commitment to the OECD’s efforts in creating a level playing field in the international arena, encompassing the principals of transparency and effective exchange of information for tax purposes.

This signing makes a total of 19 TIEAs entered into by the Cook Islands, and demonstrates that the Cook Islands has become a leading jurisdiction in the fight against tax evasion. The TIEAs allow for these countries and the Cook Islands to request information from each other where a specific taxpayer is under investigation, and where there is reason to believe that relevant information is held in the other country.

Currently the Cook Islands is undergoing a Phase 2 Peer Review by the Global Forum on Transparency and Exchange of Information for Tax Purposes, which we expect will result in a positive report.


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January 2015 tourist arrivals decline from record high

Data released by the Statistics Office showed that 6,621 tourists arrived in January 2015, a 196 person decrease (-2.9 per cent) as compared to January 2014. 
 
Despite the decline from 2014, the 6,621 arrivals is the second highest on record for a January (January 2014 being the highest January on record). 
 
55 per cent of total visitor arrivals (3,624) came from New Zealand and 19 per cent (1,234) came from Australia. 
 
Compared to January 2014, the decline was driven almost exclusively by Australian tourists (down 236) with other markets either flat or experiencing small improvements. 
 
“For the last three months (November to January) Australian arrivals have been disappointing, being 1,128 down from the same three months the year before.” MFEM Economic Advisor James Webb said. “Hopefully this trend corrects as 2015 wears on, but growth has typically not occurred in the low months of January through March. Our forecasts have been conservative, with actual arrivals tending to exceed expectations, so we are comfortable with our current outlook of low or no growth in total tourism arrivals for the remainder of the financial year.” 
 
“As always, destination development, improved productivity, and improving the value for money of tourism services (particularly for accommodation) should remain the industry’s focus going forward.”
 
 
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Standard and Poors Re-affirms Cook Islands Credit Rating at B+/B

Today, Standard and Poors re-affirmed its credit ratings for the Cook Islands at 'B+/B' with a stable outlook.
 
In describing the outlook for the Cook Islands Standard and Poors balanced the Cook Islands' sound economic growth prospects and low level of government debt, against the challenges it faces in overcoming weak political and institutional settings and fostering more robust economic growth.
 
In describing the Cook Islands debt position Standard and Poors outlined that the government's sizable infrastructure programme which is currently underway is leading to rising, albeit still modest, debt levels.
 
In commenting on the debt Standard and Poors outlined that 
 
•the focus on water, sanitation, and road infrastructure, could increase amenity for tourists and help bolster this key sector of the economy if the private sector can capitalize on this. 
 
•The concessional and long-term nature of current government borrowings, as well as the government's low debt level, means that general government interest expenditure to revenues is low: estimated to be 1.6% on average between fiscal years 2015 and 2017. But while government debt remains low, a large portion of this debt is exposed to foreign currency movements.
 
It should be noted that the Cook Islands has over the past couple of years undertaken a programme to consolidate debt into New Zealand dollars with its prominent lender the Asian Development Bank.  Currently around a third of Cook Islands’ gross debt is denominated in New Zealand dollars reducing the effect of currency fluctuations.
 
Standard and Poors further outlined that income is high compared to that of peers, with GDP per capita estimated at USD 22,200 in the year ended 30 June  2014 and project Cook Islands' real per capita GDP growth to average 2.5% over 2015 to 2017. 
 
Standard and Poors has noted that emigration is high in the Cook Islands, averaging 1.6 per cent of the population annually during the past 18 years, reflecting Cook Islanders' rights to live and work in New Zealand and Australia. 
 
Standard and Poors expects moderate further increases in tourist arrivals to support economic growth, with tourism remaining the primary economic activity in the Cook Islands, but has outlined that tourism growth may be held back to some extent in the near term by a high exchange rate, which in particular may encourage New Zealanders to travel to some of the Cook Islands' competing holiday destinations in the Pacific. 
 
 
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Government Annual Financial Reporting

The Ministry of Finance and Economic Management (MFEM) has embarked on a new approach in our attempts to produce timely consolidated financial statements for the Government of the Cook Islands. MFEM with technical assistance from KPMG is now releasing the unaudited financial statements for the year ended 30 June 2012. The unaudited financial statement for June 2013 will be released shortly after it has been reviewed by the KPMG.

These financial statements will be replaced, once it has been audited, by the audited financial statements.

>>download here

PRESS RELEASE - Business Environment Reforms Commence

PRESS RELEASE - Business Environment Reforms Commence

The Government with the assistance of the Asian Development Bank (ADB), Pacific Private Sector Development Initiative’s technical support has commenced work on important business environment reforms. The reforms consist of drafting of a new modernised Companies Act and a Personal Property Securities Act tailored to meet the local conditions. Once the Companies Act has been passed, NZ Aid Programme funding will allow the implementation of a new on-line company registry. ADB together with the NZ Companies Office will support the full implementation of the new law and on-line registry.

The new Personal Property Securities Act will allow for moveable property to be used as collateral for loans. This will bring significant benefits to all local businesses. The new system which will be supported by an on-line registry will make it easier for individuals and businesses to access finance.

Benefits of these reform initiatives include:

  • lower costs for incorporating a company;
  • lower compliance costs of companies;
  • improved searching capabilities for registry users;
  • greater transparency in the operation of companies;
  • increased access to finance for individuals and businesses;
  • improved loan to value ratios; and
  • potential for lower interest rates on loans supported by moveable property.

The ADB technical team has commenced discussions with stakeholders on these important reforms and this work will continue throughout 2015. Consultations on the policy design will occur over the next 3 months as it is important that all stakeholders are involved the design of these reforms.

For media queries please contact Richard Neves 22878

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