Country report: Anguilla – corporate domicile: a commentary

By Joe Brice, managing director, Private International Trust Corporation (PITCO)

Anguilla seeks to be a premier domicile for the incorporation of companies. A host of corporate transactions are completed on a daily basis in financial jurisdictions all over the world – onshore and offshore. But the bedrock of all offshore financial services remains the corporate.

The ownership of a wide range of assets is typically held in corporate vehicles. It has been said that the principal motivation for the use of offshore corporate vehicles is to protect investments from risk – political, financial or otherwise. This is even more of an incentive where such investments are already located offshore. The activities represent opportunities that are good for business in the place where companies are domiciled and the phenomenon is one that redounds to the benefit of the domicile in question. It provides work for the lawyers who have to attest to or opine on such issues as validity and corporate powers of the corporation. Statutory fees are paid to the local authorities and the licensed service provider is paid to establish and maintain the companies.

Corporations in offshore centres have long been used to holding real property. It is unquestionable that it is properly legal to do so. A great many high-net-worth individuals visit these islands and want to continue their association with their favourite locations in a real way. In recent times this has lead to a phenomenal growth in the purchase of high-end properties in destinations like Anguilla and throughout the islands of the Caribbean.

The use made of an offshore company will usually depend upon the objectives of those acquiring the company. Beyond the examples noted above there are many reasons why offshore companies are formed and maintained. However, a major – and still very important – reason for the use of offshore companies and offshore structures is the confidentiality it bestows. Despite the folklore of offshore centres and their characterisation in the popular press in a way that implies disapproval, few will doubt that a very important, tax-neutral reason to go offshore lies in the confidentiality that the offshore domicile confers.

Anguilla appeal

Company formation is often a simple and flexible tool at the disposal of the investor. The process in most jurisdictions is quite straightforward and efficient. Yet for all the choice that is available in so many jurisdictions, nothing beats the simplicity, charm and appeal in the formation of Anguillian companies.

It is a proud boast of Anguilla that since the early 1990s the island has pioneered the use of the Internet for the incorporation of companies online. This is achieved instantaneously through the use of a facility known as ACORN (Anguilla’s Commercial Online Registration Network). All company registrations in Anguilla have to be processed via ACORN and a variety of other corporate proceedings are also available through the online facility.

Given the march of technology, it is clear that Anguilla will inevitably lose its monopoly in the use of Internet-based arrangements for company formation. However the island’s financial-services industry will always be confident in the acknowledgement – indeed in espousal of the imprimatur of having led the way for others to follow. Meanwhile, it will not be long before an upgrade of ACORN is implemented to enable greater efficiency and more user-friendly functionality.

Finally, it is probably worth noting that there is an important specific caveat to all of the above. Anyone who takes advantage of the important benefits to be derived from the use of companies as vehicles to hold assets must be very careful to obtain competent tax advice from legal counsel or a tax accountant before proceeding. The tax laws of countries do differ – and the totality of a given individual’s circumstances that affect his tax situation differs from anyone else’s. One would be wise, therefore, to obtain appropriate advice before seeking to use the services offered in jurisdictions offshore. Whatever the domicile of the person seeking to utilise such services, it is a certainty there will be tax issues and tax consequences for the domiciliary.