Corporate Income Tax System in Turks and Caicos Islands
The Turks and Caicos Islands (TCI) has a territorial tax system, meaning that only income earned within the islands is subject to taxation. Corporate income tax is levied on the net profits of companies incorporated or resident in the TCI.
Methodology for Calculating Corporate Income Tax
The calculation of corporate income tax in the TCI involves the following steps:
- Determination of Taxable Income: The taxable income of a company is calculated by deducting allowable expenses from its gross income. Allowable expenses include costs incurred in the production of income, such as salaries, rent, and depreciation.
- Application of Tax Rate: The applicable corporate income tax rate is then applied to the taxable income to determine the tax liability.
Corporate Income Tax Rates
The corporate income tax rate in the TCI is a flat 20%. There are no tiered or graduated tax structures.
Taxable Income
Taxable income for corporations in the TCI includes all income derived from business activities carried out within the islands. This includes income from trading, manufacturing, services, and investments.
Exemptions
Certain types of income are exempt from corporate income tax in the TCI, including:
- Dividends received from other TCI companies
- Interest income from TCI government bonds
- Capital gains on the sale of assets used in the business
Legal Framework
The legal framework governing corporate income tax in the TCI is primarily contained in the Income Tax Ordinance (Cap. 13.01). The Ordinance defines the tax rates, taxable income categories, and exemptions applicable to corporations.
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