Jurisdiction Spotlight: Anguilla

Time to take a look at another British Overseas TerritoryAnguilla.

History

AIAnguilla was likely settled as early as 2000 BC, when settlers from the Orinoco basin in modern-day Brazil explored the Caribbean islands.

The name Anguilla is attributed to a French explorer, who likely landed in the island in 1565, naming the island for its eel-like shape (anguille).

Recorded history begins in 1650 when settlers from then-British Saint Kitts and Nevis arrived in the island of Anguilla. It became a part of the Leeward Islands colony.

Anguilla suffered initially with poor yields on cotton and tobacco plantations. Sugar turned out to be the saving grace of the island and it over time became an important source of sugar for Europe.

Like many other Caribbean islands, Anguilla (which technically consists of Anguilla and a few smaller islands) was used as a proxy for various European conflicts, mostly between the French and the British. The French invaded Anguilla twice (1745 and 1796), causing significant damage the second time.

In 1825, Britain created a union between Saint Kitts and Nevis and Anguilla, effectively giving Saint Kitts and Nevis direct legislative control over Anguilla. Sugar plantation owners protested this and, due to perceived insufficient economic development, so did the locals. In 1872, the Anguillians petitioned the British to dissolve the union. This was ignored and in 1882, the Leeward Islands Federation was formed, consisting of Saint Kitts and Nevis, Antigua and Barbuda, Montserrat, British Virgin Islands, Dominica, and Anguilla.

The Anguillians were not happy with this, worsened by droughts and the Great Depression, which affected most of the Caribbean as well.

After the Great Depression, Anguilla moved towards universal suffrage (1952) and in 1956, the Leeward Islands Federation was dissolved. In 1958, Anguilla and Saint Kitts and Nevis were again united in the West Indies Federation. This lasted until its collapse in 1962.

In 1967, yet another union was formed between Saint Kitts and Nevis and Anguilla, where Anguilla was an associated state with Saint Kitts and Nevis. Anguilla protested this move. Saint Kitts police attempted to take over Anguilla and proclaim itself an independent republic, which after failed peaceful negotiations prompted British military involvement in 1969. The British quickly resumed control over Anguilla and by 1971, Anguilla was under direct British rule.

Through liberalizations and movements for independence during the 70s, Anguilla finally had its own constitution by the year 1980 (effective 1982) and became a dependent territory (in 2002 renamed British Overseas Territory).

Today, Anguilla is a politically stable and reasonably well-off British Overseas Territory. Its economy is based on offshore financial services, tourism, fishing, and rum export.

Overview Data

[ws_table id=”54″] [google-map-v3 width=”100%” height=”250″ zoom=”6″ maptype=”roadmap” mapalign=”center” directionhint=”false” language=”default” poweredby=”false” maptypecontrol=”true” pancontrol=”true” zoomcontrol=”true” scalecontrol=”true” streetviewcontrol=”true” scrollwheelcontrol=”false” draggable=”true” tiltfourtyfive=”false” addmarkermashupbubble=”false” addmarkermashupbubble=”false” addmarkerlist=”18.2148129 N, 63.05744060000001 W{}1-default.png” bubbleautopan=”false” showbike=”false” showtraffic=”false” showpanoramio=”false”]

Anguilla incorporation

In the last two or so years, Anguilla has been a growing offshore financial incorporation center. One reason for this has been the increased compliance requirements and higher costs of its neighbour and financial grandfather the British Virgin Islands.

Most companies registered in Anguilla are either IBCs or LLCs.

Anguilla is an almost entirely tax free jurisdictions, setting it apart from many other tax havens that ring-fence their offshore financial sectors while charging tax on local companies, which is a highly controversial practice.

There are no taxes on corporations.

Anguilla IBC

The Anguilla IBC is essentially your run-of-the-mill modern IBC legislation. The International Business Companies Act (see also International Business Companies Act Regulations) was enacted in 1995.

Anguilla provides an almost perfect blend of the taxation advantages, ease of operation, and privacy of IBCs together with the reputability of being a British Overseas Territory. Now, it is a farcry away from the likes of Gibraltar and Malta in terms of reputability but among IBC jurisdictions, being a part of the United Kingdom has its advantages.

IBCs in Anguilla – as in nearly every other IBC jurisdiction – are not subject to any tax, require only one director and shareholder, and need not make any annual filings or audits. A financial statement needs to be prepared and books must be kept. There are no public records of the directors or shareholders of companies, but a public record of company names exists, called ACORN.

Fees for forming and maintaining an Anguilla company are generally low and due to quite healthy competition among operators in the market, the price you pay for an Anguilla company is often in range with the costs for more popular (but less reputable) jurisdictions like Seychelles and Belize.

Anguilla LLC

Based on the Wyoming LLC, the Anguilla Limited Liability Company Act (see also Limited Liability Company Act Regulations) competes with Saint Kitts and Nevis for position as best offshore LLC jurisdiction. Saint Kitts and Nevis is more popular but Anguilla is growing.

An Anguilla LLC can be perpetual and need only one member. There is no corporate tax levied on Anguillla LLCs.

Other Forms

There are three other forms of companies in Anguilla: the normal domestic companies (COCs for Company Ordinance Companies), Limited Partnerships (LPs), and Foundations.

COCs and LPs are limited to or effectively only used by residents.

Banking in Anguilla

Close followers of this blog will know that I am not a fan of banks in the Caribbean in general and Anguilla is no exception.

Like most banks in the region, Anguillian banks offer bare minimum services at rather high prices. It’s easy to open accounts and account opening can be done directly with the banks.

There is a distinction between domestic and international (offshore) banking licenses. The Trust and Offshore Banking Act (TOCBA) is comparable to other international banking acts, with low minimum capital requirements but – typical to British Overseas Territories – strict requirements on due diligence and background checks of founders and directors of banks.

The most popular offshore bank in Anguilla is probably the National Bank of Anguilla PBT. FirstCaribbean International has a branch in Anguilla.

Financial services in Anguilla

Under The Insurance Act, Anguilla has an Offshore and Captive Insurance (Class B). It has not reached the popularity of for example Bermuda and the Cayman Islands. Despite this, the capital requirements are modest.

Living in Anguilla

There are significant tax advantages to living in Anguilla – if you can get a residence permit, which is no easy task.

There is no income tax (save for a 5% social insurance contribution and a 3% stabilization tax, both paid by the employer), capital gains tax, wealth tax, stamp duty, sales tax, or inheritance tax. There is a property tax of 0.75% and a few other very small taxes, though. As mentioned earlier, Anguilla is almost completely tax neutral.

The Anguillian work permit process is a combination of rigorous and old-fashioned. Foreigners are only given work permits after job openings are announced on the ratio and no local can be found to fill the position. Starting your own business in Anguilla can be a way to get around this but even then there are strict requirements.

To get a Permit of Permanent Residence (PPR), you need to first have a work permit, have exceptional professional skills, or invest 2.5 million USD in the government. Now, Anguilla might look nice in pictures but chances are you’ll have a higher quality of life in for example Bermuda, Cayman Islands, or Turks and Caicos, under more or less the same requirements.

The Future of Anguilla

As of publishing this post on the 7th of August 2014, the Anguilla FSC has invited the public, through registered agents, for an open debate on the future of Anguilla. In particular, what will be discussed is increased transparency, even going so far as to consider a central registry of UBOs for companies. Whether such a registry would be public or limited to for example only government authorities and/or banks is one of the topics to be discussed.

The implication bearer shares have on such a registry is also going to be discussed.

Anguilla takes compliance seriously, unlike so many other offshore jurisdictions. This is a factor to Anguilla’s relatively good international reputation. However, the FSC recognizes that being a forerunner in compliance is both good and bad.

Good because it improves on the reputation and international perception of the jurisdiction. It would be seen even less as a secrecy jurisdiction and instead try to mimic the likes of Hong Kong and Malta in being reputable, transparent zero/low tax jurisdictions.

Bad because it may end up benefiting its neighbours, i.e. companies re-domiciling to jurisdictions that continue to offer secrecy.

It is unlikely that Anguilla will move towards full transparency. There are some very clever people involved in the on-going discussions and the end-result will hopefully be one that adds just enough transparency to put Anguilla ahead of the rest of the Caribbean without causing a flight of companies.

Final words

Anguilla is a growing little tax haven, thanks to what some perceive as excessive regulation and poor reputation of BVI, but also Cayman Islands. Many seeking to incorporate within the UK in one of the British Overseas Territories are finding Anguilla an increasingly attractive alternative. Incorporating in Anguilla is increasingly popular. The fully electronic ACORN system for incorporation makes it possibly the fastest company registrar in the world, once payment is complete and the necessary documents sent to your registered agent.

Anguilla has committed to tax treaties and is empowered to fulfil them. The government is nearly always represented at Caribbean anti-money laundering and financial services events and seminaries.

Its banking sector leaves a lot to be desired, with nearly all Anguillian companies banking elsewhere. It is a somewhat more reputable jurisdiction than other IBC jurisdictions, which may facilitate bank account opening. This would become especially true if Anguilla takes a leap forward in transparency.

Click here to see other posts in the Jurisdiction Spotlight series.

Further Reading

Leave a comment

Skip to toolbar