Financial Secretary Office News

Financial Secretary Office News

Cook Islands Government Quarterly Financial Reports - September 2019

The Cook Islands Government (CIG) preliminary financial outcome for September 2019 quarter is now available.

Net Operating Balance and Fiscal Balance of General Government

September 2019 Quarter

Budget

(‘000)

Actual

(‘000)

Variance

(‘000)

Operating Revenue $49,381 $49,133 -$248
Operating Expenditure $46,721 $41,604 $5,117
Net Operating Balance $2,660 $7,529 $4,869
       
Add Depreciation $3,435 $2,482 $953
Less Capital Expenditure -$6,445 -$4,464 -$1,981
Fiscal Balance -$350 $5,547 $5,897

The net operating balance for the period ended 30 September 2019 was a surplus of $7.53 million, which represents $4.87 million higher compared to the surplus estimated for the quarter.

Fiscal Balance

The overall fiscal balance[1] however was $5.55 million and represents $5.90 million higher than the fiscal balance estimated for the quarter.

In addition to underspending in operating expenditure, spending on capital projects were also below budget estimates by $1.98 million in the first quarter, mainly due to scheduling of major projects especially projects administered by Cook Islands Investment Corporation (CIIC). These capital projects are forecasted to be implemented in the second half of the financial year.

Official Development Assistance

Official Development Assistance (ODA) was appropriated at the total value of $65.22 million in the 2019/20 Appropriation. This value includes the Core Sector Support Grant Funding Arrangement with New Zealand for Education, Health and Tourism.

The first quarter for the financial year 2019/20 reported a total spend of $2.21 million. The low spending for ODA in the first quarter of the financial year was a result of delays in ongoing negotiations on priorities and the design of individual grant funding agreements. Spending is expected to pick up as we progress towards the second half of the financial year.

Financial Position

Overall cash balance was $176.19 million and includes funds that are committed of $140.51 million. Committed funds relates to funds set aside for specific purposes which includes the Reserve Trust Fund, the Loan Repayment Fund (LRF), Stabilisation Account Disaster Response Trust and other Trust accounts.

Total Gross Debt was $96.33 million at the end of 30 September 2019. This represented actual disbursed loans only adjusted for debt service repayments. There are other loans that government has committed to but are yet to be drawn of $18.99 million. The undisbursed loans are made up of $13.95 million for the Disaster Recovery Management (DRM) loan, which is only triggered and drawn down in the event of a catastrophe, and $5.04 million for the Undersea Broadband Cable loan which is expected to be drawn in early 2020/21.

Net Debt was reported at $47.47 million at the end of the reporting period. Net debt adjusts the Gross Debt for the effect of the LRF held against those loans and the loans held on behalf of SOE’s.

(END)

 



Global Forum 10th Anniversary Plenary Meeting 26-27 November 2019

Recently Revenue Management Division of the Ministry of Finance & Economic Management participated at the OECD’s Global Forum Plenary Meeting on Transparency and Exchange of Information for Tax Purposes (the Global Forum).

Over 500 delegates from more than 140 jurisdictions, international organisations and regional groups attended. 40 delegations were represented at Ministerial level.                            

Representatives from the financial services sector, the academic community and the media also participated in the first day of the meeting. This reaffirmed the international community’s strong support for the tax transparency agenda and the work carried out by the Global Forum.

To mark the Global Forum’s 10-year anniversary, on the first meeting day Ministers and other high-level representatives recalled the progress made and the widespread impact the transparency agenda has had in fighting tax evasion and avoidance. Banking secrecy has been dismantled with close to 100 jurisdictions now automatically exchanging information on financial accounts each year. Through voluntary disclosure programmes and tax investigations, Global Forum members have already identified EUR 102 billion in additional revenues (tax, interest, and penalties).

The work of the Global Forum focuses on ensuring the effective implementation of the automatic exchange of financial account information (the AEOI Standard) and of the exchange of information on request (the EOIR Standard). The Cook Islands has successfully implemented both. Last year almost 90 jurisdictions automatically exchanged information on 47 million financial accounts worth approximately EUR 4.9 trillion. 2019 is the third year of exchanges under the AEOI Standard and 94 jurisdictions are now exchanging financial account information.

This year under the AEOI Standard, Revenue Management Division has provided 44 jurisdictions with financial account information relating to over 22,000 financial accounts. As such, a number of follow up requests are being made on an annual basis under the EOIR Standard.

This year for the first time, the Cook Islands received financial account information from 31 jurisdictions which related to over 2,500 financial accounts held worldwide. Finance Minister Mark Brown said “We did give people plenty of time in 2017 to declare their incomes held in overseas accounts. The AEOI systems that we are part of means you cannot hide your income, if everyone paid their share of tax then we could look at reducing tax rates and that is fair to everyone”. The Revenue Management Division’s Director Xavier Mitchell said “where relevant we are now exploring how best to use this information to ensure everyone pays their fair share of tax on their worldwide income in the Cook Islands”.

[End]

17 December 2019

Customs cracks down on tobacco smuggling

Customs is warning travellers against carrying undeclared tobacco on behalf of others, after a series of search warrants were executed in Auckland today, and a mother and her adult son arrested.

New Zealand Customs Service commenced an investigation earlier this year, with the Cook Islands Customs Service (CICS) and the Cook Islands Financial Intelligence Unit (CIFIU), to target and dismantle a criminal syndicate involved in smuggling large quantities of tobacco and cigarettes from the Cook Islands to New Zealand, and suspected money laundering associated with the smuggling.

Investigations identified a family-based criminal enterprise was operating out of Auckland, and manipulating travellers to illegally bring tobacco into New Zealand. These travellers subsequently faced a range of penalties, including the tobacco being seized and instant fines.

Customs believes the offending has spanned at least 18 months, and involved 79.6 kgs of intercepted tobacco and $113,422 in evaded duties & GST.

A 34-year-old New Zealand male, believed to be the syndicate’s organiser, was arrested at Auckland Airport on Tuesday (12 November) when returning from Rarotonga.

Customs investigators, with the assistance of NZ Police, executed search warrants at residences this morning, leading to the arrest of a 52-year-old New Zealand female. Several stolen vehicles were recovered during the search, and small amounts of cannabis, MDMA, and cocaine were seized.

Customs Investigations Manager Bruce Berry says the investigation and arrests should serve as a warning to both criminal syndicates and travellers that Customs actively targets tobacco smugglers.

“Criminals or opportunists may assume Customs isn’t concerned about travellers who try to smuggle undeclared tobacco, but that’s not true – we have a team that specifically targets the organisers of cross-border revenue fraud. We urge travellers not to bring in undeclared tobacco for others.”

“It’s important to acknowledge the incredible work of the Cook Islands Customs Service and the Cook Islands Financial Intelligence Unit, who have been closely involved from the beginning, as well as the assistance of NZ Police that also contributed to the success of this operation,” says Mr Berry.

The CICS and CIFIU shared key intelligence that assisted with enquiries into the criminal syndicate. The two individuals arrested are believed to be linked to organised crime in Auckland.

Head of Cook Islands Financial Intelligence Unit (CIFIU) Phil Hunkin says this operation is an excellent example of agencies working together.

“New Zealand and Cook Islands law enforcement regularly meet and exchange information to combat national and transnational crimes. We will also continue to target the criminal finances to ensure that crime does not pay,” says Mr Hunkin.

Comptroller of the Cook Islands Customs Service (CICS) Xavier Mitchell confirmed that the CICS will continue to work closely with the New Zealand Customs Service, Cook Islands Financial Intelligence Unit and other agencies to combat both national and transnational crime. 

“This is a great result which highlights the benefits of working collaboratively and sharing intelligence". 

If you have suspicions about someone who is smuggling cigarettes, call +682 29365 and speak with the CICS Chief Customs Officer, or send and email to customs.info@cookislands.gov.ck.

-ENDS-
13 November 2019

  Tobacco seized

  Images: Tobacco intercepted at Auckland Airport that were linked to the criminal syndicate