CEO Insight: The Cook Islands was adjudged to be “largely compliant” following the OECD’s March 2015 Phase 2 Peer Review Report. What steps have subsequently been taken to address any highlighted outstanding issues?
Tamatoa Jonassen: Given the details of the Phase 2 Peer Review assessment of the Cook Islands’ ability to exchange information for tax purposes, the Cook Islands’ rating of “largely compliant” was actually very positive. The assessment focused on ten elements, including maintaining ownership information, accounting records, and powers to request information, and it resulted in the Cook Islands receiving the highest rating of “compliant” in eight of the ten elements. The remaining two elements were easily fixable.
One element in the Phase 2 Peer Review was assessed lower because the Cook Islands received a relatively low number of exchange of information requests. Since the number of requests should increase over time, this element is expected to be re-assessed as “compliant.” Furthermore, since the assessment was conducted, the Cook Islands has entered into two additional Tax Information Exchange Agreements (TIEAs), with Canada and Belgium, bringing the number of Cook Islands TIEAs with other countries to 21. In context, the Cook Islands has more TIEAs than any other Pacific island nation and has more TIEAs signed with European Union member countries than approximately 80% of other countries with TIEAs signed with members of the EU. The second element that was assessed lower was effectively a recommendation to monitor the operation of several legislative amendments then newly introduced in 2013 following the Phase 1 Peer Review process. These 2013 amendments mandated that accounting records and underlying documentation be maintained and subject to penalty.