Antigua Summary

Antigua (pronounced An-tee-ga) is an island in the Caribbean, part of the country of Antigua and Barbuda. It is also known by another name, Wadadli, which means approximately "our own" (Wadadli is also the name of the local beer brewed on the island).

Offshore Business in Antigua and Barbuda

The Antigua and Barbuda Advantage... Since its independence in 1981, the twin-island state of Antigua and Barbuda in the Caribbean has continued to practice a tradition of English Common Law. Located less than 300 nautical miles Southeast of Puerto Rico, in the Leeward Islands. Its legal procedures are structured in accordance with strong democratic principles of good governance, patterned after the British parliamentary system. In 1982, legislation was enacted under the International Business Corporations Act, with subsequent amendments in 1984 and 1985, to make Antigua and Barbuda a choice jurisdiction for offshore banking. Operations under this Act are controlled by the Ministry of Finance in Antigua.

While Antigua and Barbuda is probably best known as an up-market destination for more discriminating tourists, its natural and developed assets have also allowed it to emerge as an attractive offshore business centre. The country is in a convenient time zone, sharing the same time as New York, Toronto, Central and part of South America, and falling five hours behind the UK and Europe in the summer and four hours in the winter which allows international business to be transacted easily within an appropriate time frame. Antigua's international airport is a major gateway for the Caribbean, serving British Airways, US Air, Virgin Atlantic, American Airlines, Air Canada, BWIA and LIAT, with direct flights from New York, Miami, Toronto and London. Its international telecommunications are excellent, with direct access into the global stream of financial and business data. Electronic funds transfer is readily accomplished, providing same day value, and securities can be placed and executed within 24 hours.

There is a prosperous English-speaking community, with a resident population of 80,000. Its people are involved primarily in business related to the tourism industry and in commerce. The country enjoys the highest per-capita income in the Eastern Caribbean. First-rate professional services are widely available, including banking, law, accounting, and management resources.

International commercial banking has been conducted on Antigua for many years. Offshore banking is more recent, having started in 1983. Since that time the industry has grown rapidly. Working in co-operation with the private sector, the Government has improved Antigua's offshore company and banking environment through the introduction of new foreign residency, trust, and partnership legislation.

International Business Corporations Act of 1982

The prevailing offshore legislation provides for speedy formation of international business corporations (IBCs) at very competitive charges. The formation can be carried out by a locally registered trust company or by an accountant or attorney. Formation can usually be completed within 24 hours and full corporate and trust services are available to both private and corporate investors including:

1. Registration and maintenance of corporate charters for offshore companies;
2. Reception, management, and disbursement of the assets of offshore companies;
3. Provision and maintenance of a registered office;
4. Maintenance of the company's records and statutory register;
5. Preparation of all necessary corporate returns and reports to the Director;
6. Provision of directors and officers on request;
7. Incorporation and management of offshore banks and captive insurance companies; and
8. A full range of traditional trust services.

Some of the benefits provided to offshore companies formed under the IBC Act include the full exemption of all direct taxes in respect of any international trading, investment or commercial activity including withholding taxes and stamp duties. For banking there is a 3% tax on gross income (i.e. interest income and fees derived from the operations and investments of the banking business minus interest expense). No minimum capital is specified for an IBC and shares may have a nominal or no par value. The transfer of the charter of an IBC to a foreign jurisdiction, or vice versa, is explicitly permitted. The board of directors of a corporation may consist of a single member. In the case of banking, trust and insurance corporations, at least one director must be a citizen and resident of Antigua and Barbuda.

Confidentiality Provisions

The IBC Act provides criminal penalties for any disclosure of the business affairs of customers regarding banking or trust matters. The only exception for the disclosure of information relates to sound evidence regarding an alleged criminal offence that is triable in Antigua (or which would have been triable, if it has been committed in Antigua).

There are specific advantages for Canadian entities to form an IBC in Antigua that generates an active business income, because dividends paid out of income earned in Antigua are considered to be paid out of exempt surplus. Antigua is one of the countries listed in the Canadian Regulation 5907 (ii) which allows this arrangement. There are no tax treaties with European countries, except in the case of the UK and this is being updated through negotiations.

Incorporation Procedures

Every IBC must have a registered office and a resident agent in Antigua. This function is regularly performed by the trust company or by the professional who performed the incorporation process. The resident agent is responsible for paying the annual government fees and for keeping the company in good standing. The annual government licence fee for an IBC is US$300; for an IBC licensed to carry on international banking it is US$15,000 and for an IBC licensed to carry on an international insurance business it is US$10,000.

Fees charged by trust companies or professionals for incorporation and annual maintenance will vary, but fees for the formation of an IBC without an international banking or insurance licence start at about US$2625, with an annual maintenance fee of US$1350. If the applicant for an IBC wishes to have a registered agent serve as its corporate director, an additional fee will be charged, between US$250 and US$1,000 for each director.

Incorporation and maintenance fees for an IBC with an international banking or insurance licence are higher and may be related to the level of required management services. Fees for trust management services are also dependent on the nature and value of assets and the required level of service.

Ship Registry

In 1985, Antigua enacted the Merchant Shipping Act, which further expanded the facilities of its offshore centre. The designated port of registry in St John's, Antigua, is under the supervision of the Registrar of Ships, Department of Marine Services and Merchant Shipping. Registration can also be carried out in Germany by the Commissioner of Maritime Affairs, Department of Marine Services and Merchant Shipping, Patentbusch No. 4, 26125 Oldenburg, Germany.

The procedures for ship registration or parallel (bareboat) registration are efficient and can be organised through several of the offshore operators. With the submission of required documentation, the Department of Marine Services provides quick response. The registration fees are competitive with other jurisdictions and are transparent, with no hidden costs. No age is set for the acceptance of ships for registration, but all ships over 499GRT must be in class. The Department of Marine Services does not duplicate safety inspections, but complements and controls the work of class societies. Unlike some other registers, Antigua has no nationality requirements for manning vessels. For more information please see the Antigua and Barbuda international shipping register website at antiguamarine.com

Antigua and Barbuda's Financial Sector

To establish a Financial Institution, an international banking licence is granted to an IBC, at the sole discretion of the Supervisor of Banks and Trust Corporations. The supervisor may revoke the licence at any time if, in his opinion, the revocation is in the public's interest. The minimum capital requirement is currently five million US dollars or its equivalent in another major currency. However, it is exempt from any exchange control or foreign currency levy. IBC banks are required to appoint an auditor and to file unaudited quarterly returns and annual audited accounts with the Supervisor of Banks and Trust Corporations. The accounts are provided in a consolidated form.

Internet Gaming

Internet gaming facilities are deemed to be financial institutions under the law. They are regulated by the Financial Services Regulatory Authority (FSRC), which gives the internet gaming operators a high level of comfort in the jurisdiction and in the ability to conduct business on a predictable basis. It is useful to take note of the following points:

(a) A 3% tax is payable by operators on their "Net win" defined as "the difference between the gross stakes laid and the winnings paid out".
(b) Operators are entitled to deduct software licensing or software development costs from (a) above, capped at no more than 40% of the Net win for all companies provided claims for the deduction of such costs are accompanied by documentary support evidencing the costs.
(c) Operators are entitled to deduct charge backs on credit cards for a period up to 18 months after the original charge was made provided claims for the deduction of such charge backs are accompanied by documentary support evidencing the original credit and the charge back.
(d) The 3% tax on Net Win and the deductibles, as described at (a), (b) and (c) above, are fixed until 2006, after which they will be subject to review by the Government and the representatives of the Industry.
(e) Operators are entitled to a maximum cap of US$50,000.00 per month on taxes and the Commissioner of Inland Revenue would have no interest in the books of entities that pay the full cap. However, such operators are obliged to continue to maintain financial books and records and to provide access by the Government through its authorised agencies in the event of the need to examine such books and records in accordance with the laws of the State particularly the Money Laundering (Prevention) Act, the International Business Corporations Act and the Proceeds from Crime Act and their amendments.
(f) The maximum cap of US$50,000.00 per month on taxes and the terms and conditions described in (e) above would remain unchanged until 2004, after which they will be subject to review by the Government and representatives of the Industry.
(g) Gaming Licence fees are US$75,000.00 per annum for those Operators who maintain a primary server and operations in Antigua and Barbuda and who pay the tax as described above.
(h) Wagering Licence fees are US$50,000.00 per annum for Operators who maintain a primary server and operations in Antigua and Barbuda and who pay the tax as described above.

The internet gaming industry benefits from high quality telecommunication facilities provided by Cable and Wireless. The costs of such telecommunications are highly competitive and are lower than in the vast majority of jurisdictions which provide a home for internet gaming.

Insurance Licence

An internal insurance licence permits an IBC to engage in any insurance business other than domestic insurance. The Superintendent of International Insurance Corporations is empowered to revoke or suspend the licence if its registration is deemed to be detrimental to public interest. A stated capital of at least US$250,000 must be maintained at all times. Annual audited accounts must be filed with the Superintendent of International Insurance Corporations.

Trust Services

Trusts administered by Antigua and Barbuda trust companies are not subject to any legislation imposing taxes on inheritance, profits, income, or on any capital assets, gain or appreciation on any assets or dividends, and interest paid out by an IBC as a trustee on behalf of a non-resident of Antigua and Barbuda, for a period of 20 years from the date of incorporation of the IBC.

Although there is no requirement that a trust instrument be recorded, it may be recorded in the non-public records of the Director of International Business Corporations who will issue a Certificate of Recordation attached to the original of the trust instrument.

There is also no restriction on accumulations by trusts and the rule of law known as the rule against perpetuities does not apply to any property vested in a trust corporation. The minimum capital requirement for a trust corporation is US$500,000. The IBC Act and domestic laws governing trusts, based on the British Common Law, which was adopted by Antigua as a colony and readopted after independence, still apply to all international trusts.

OffShore Banks and Companies

In 1982, the Government introduced the International Business Corporations Act permitting off shore banking, insurance and trust corporations. The benefits of the Act include:

• no control on exchange and freedom to operate bank accounts anywhere
• no minimum capital requirement (except for
(i) banking where US$5 million is required together with the filing of quarterly returns;
(ii) Trusts where a minimum capital requirement of US$500,000 and the filing of quarterly returns; and
(iii) Insurance companies which must file annual reports and have a reserve capital of US$250,000)

• The formation of an off shore company costs US$9750 and is renewable every year.

>Meeting International Standards

Antigua and Barbuda has paid serious attention to the various initiatives by the G7 countries to ensure that the highest international standards are applied to its financial services sector.

In 2000, the Financial Action Task Force (FATF), a body established by the G7 as an ancillary entity of the Organisation for Cooperation in Economic Development (OECD), declared Antigua and Barbuda to be fully cooperative in the fight against money laundering. The FATF found Antigua and Barbuda's legislative regime and its regulatory and enforcement machinery, developed and strengthened between 1999 and 2001, to be consistent with the highest international standards.

The offshore sector is regulated by the Financial Services Regulatory Commission (FSRC) whose Board of Directors is comprised of public officials of high repute who are subject to severe penalties under the law for any breaches of their fiduciary responsibilities. The staff of FSRC is also governed by strict laws governing their behaviour.

The Supervisory Authority for money laundering and other financial crimes is the Office of National Drug Control and Money Laundering Policy (ONDCP). ONDCP and IFSRA work closely together to ensure that Antigua and Barbuda enjoys a good reputation in the international banking community.

Antigua and Barbuda expects to join the OECD's Global Tax Forum as a full partner and will participate with OECD and other countries in ensuring that tax practices across the globe are on a level playing field and that the rights of persons and companies are fully respected with regard to exchange of information on tax matters.

Background

The original legislation governing the Antigua offshore jurisdiction is the International Business Corporations (IBC) Act of 1982. Within fifteen years the number of offshore banks registered in Antigua exceeded seventy institutions. In 1998 the government of Antigua and Barbuda undertook a major exercise to over-haul legislation for banking and money laundering prevention. The task was challenging and the closure of more than thirty offshore banks indicates the depth of the major re-organisation that took place.

Offshore banks are still licensed under the original IBC Act, but amendments to this Act as well as to the Money Laundering (Prevention) Act (MLPA) in 1999, 2000 and 2001 have created a regulatory and compliance environment equal to, or stronger, than most international financial centres. The Government of Antigua and Barbuda received, the support and cooperation of most of the private sector, which is generally committed to meeting or surpassing the international standards set for the Sector.

Regulatory Control

To focus regulation more closely, the Government established a statutory authority in 1998, known as the International Financial Sector Authority (IFSA) and charged it with responsibilities to supervise and develop the sector. Concerns were later raised, however, that the IFSA depended upon the private sector for assistance. In response, the Government amended the legislation, to separate the IFSA's functions for supervision from any promotional activity. It also provided for a new International Financial Sector Regulatory Authority (IFSRA) that is fully independent of the private sector.

Know Your Customer

Entrenched in the amended IBC Act, are strong "know your customer" requirements to govern the conduct of banks and their clients. No anonymous accounts can be established. Each account application must provide evidence of identity, place of residence and other current banking relations. Also, customers cannot hide behind corporate veils. Banks require disclosure of true beneficial ownership and the true identity of directors and shareholders. It is the responsibility of banks to know their customers, so that in the event the Supervisory Authority requires information under the law, it can be made available.

Banking Secrecy

The confidentiality afforded to clients by banks will not provide a safe harbour to criminals. In fact, subject to the provisions of the Constitution, the provisions of the MLPA will stand as the governing Act, notwithstanding any obligation to secrecy or other restriction regarding the disclosure of information by any law or otherwise. Bank clients need not to be concerned with this issue. It is only relevant to those who are the subject of a criminal investigation involving the offence of money laundering and when the Court in Antigua has, on application by the competent Antiguan authority, ordered the disclosure of information. In other words, the privacy of customers' banking information remains fully confidential unless it can be established in a Court of competent jurisdiction that a crime has been committed.

No Cash Deposit

In April 1999, Antigua and Barbuda became the first, and possibly only, jurisdiction to ban the acceptance of cash or bearer negotiable instruments in any amounts. Antigua demonstrated its commitment to be pro-active against money laundering. Given that money laundering begins with the conversion of currency, and one of the concerns expressed has been that anonymous and illicit funds can be returned to their financial systems via correspondents for offshore banks, the Antigua prohibition is a positive and innovative action. And, while it does not prevent money laundering by other means of fund transfers, such other means allow for full identification of the transaction details.

Transaction Record Keeping

The IBC Act as amended requires banks to maintain full details of all transactions in relation to deposits and withdrawals, and to retain the information obtained by the regulation for a period of five years. As no offshore bank may serve as originator or recipient in the transfer of funds on behalf of a person who is not an account holder, all transactions should be easily traceable in the event of an enquiry by the Supervisory Authority or from a correspondent bank.

Suspicious Activity Reports

In keeping with international standards, offshore financial institutions are required under the MLPA as amended, to pay special attention to all complex, unusual or large business transactions, whether completed or not, and to all unusual patterns of transactions and to insignificant but periodic transactions, which have no economic or lawful purpose. On reasonable suspicion that a transaction could institute or be related to money laundering, the bank is obligated to promptly report the suspicious transaction to the Supervisory Authority. The Act also requires banks to pay attention to relations and transactions with persons, including business and other financial institutions, from countries that have not adopted a comprehensive anti-money laundering programme.

International Cooperation

In 1995, Antigua was amongst the first countries in the Caribbean region to sign a maritime law enforcement counter drug agreement and an updated extradition treaty with the US. Mutual Legal Assistance Treaties in criminal matters were signed with both the US and the UK in 1996. The jurisdiction is a member of the Caribbean Financial Action Task Force (CFATF) and is in full compliance with all its requirements. In March 2000, Antigua became the first country to sign a commitment letter to the principals of the UN Offshore Forum (UNOF), which confirmed government's agreement to adhere to the UN's minimum performance standards relating to banking practices, transparency rules and international cooperation.

The cooperation provided under these various agreements and treaties is also supported under the MLPA. It allows for the Court or the Competent authority in Antigua to cooperate with the Court or other competent authority of another state, and to take appropriate measures to provide assistance in matters concerning money-laundering offences, provided the measures are in accordance with the MPLA and within the limits of their respective legal systems. Assistance includes providing original or certified copies of relevant documents and records, save that no information related to a client account held by a financial institution shall be disclosed unless the client is the subject of a criminal investigation involving the offence of money laundering and the Court has, on application by the competent authority, ordered the disclosure of the information.

Antigua has successfully cooperated with the authorities of the United States, the United Kingdom. Switzerland, Canada, Belgium and Ukraine in enforcing the law against money laundering and drug traffickers. The role of the authorities in Antigua has been publicly acknowledged and praised by the governments of the US, Belgium, Canada and the Ukraine.

In the fiercely competitive environment of offshore centers, Antigua has placed emphasis on ensuring that the reputation of its centre and the quality of its regulation meets international standards. The various steps taken to address the concerns of the international community will benefit the offshore financial institutions and their clients, as well as their correspondent relations with other banks. Antigua has made the decision to remain a strong competitor in the international financial market by maintaining a well-regulated sector in which financial institutions are committed to providing a secure environment for their clients, with full compliance to international standards. Antigua and Barbuda has comprehensive anti-money laundering legislation in place.