Exports and Imports
The Cook Islands primarily exports tropical and citrus fruits, along with some handicrafts and clothing. In 2023, exports totaled approximately $15 million, while imports mainly consisted of goods for consumption, machinery, and equipment, totaling around $25 million.
Infrastructure
Infrastructure in the Cook Islands is generally limited, with a focus on maintaining basic amenities such as roads, ports, and airports. The road network connects major towns and villages on the islands, but it may be limited in some remote areas. Approximately 40% of roads are paved, with the remainder being gravel or dirt tracks.
Balance of Trade
The Cook Islands often faces a trade deficit due to its reliance on imports for various goods and services. In 2023, the trade deficit was approximately $10 million. This deficit is typically offset by remittances from emigrants and foreign aid.
Fiscal Policy
The government of the Cook Islands manages its fiscal policy to support economic growth and development. This includes strategic government spending on infrastructure projects, education, healthcare, and social welfare programs. Taxation policies are designed to generate revenue while ensuring the competitiveness of local businesses. In 2023, government spending amounted to approximately $30 million, with tax revenue of around $20 million.
Monetary Policy
The Cook Islands does not have its own central bank. Instead, monetary policy is influenced by external factors, particularly decisions made by New Zealand's Reserve Bank, given the strong economic ties between the two countries. Currency in the Cook Islands is the New Zealand dollar.
Trade Agreements
The Cook Islands benefits from trade agreements facilitated by its association with New Zealand and its membership in regional organizations such as the Pacific Islands Forum. While not directly involved in agreements like NAFTA, it may participate in agreements that New Zealand is party to, enhancing its access to international markets.
Environmental Regulations
The Cook Islands places importance on environmental conservation and sustainable development. Regulations are in place to protect natural resources, marine ecosystems, and biodiversity. Efforts are made to mitigate the impact of climate change and promote eco-friendly practices in tourism and other industries.
Tax System in Cook Islands
Capital gains tax: The Cook Islands does not impose a capital gains tax on profits from investments. This means that individuals and businesses are not subject to taxes on the appreciation of their assets or investments.
Corporate tax rate: Corporate tax rates in the Cook Islands vary depending on the type of business and income. Generally, the corporate tax rate ranges from 20% to 30%. However, there are provisions for tax incentives and deductions for certain industries or investments aimed at promoting economic development.
Sales tax: The Cook Islands has a value-added tax (VAT) system known as the Goods and Services Tax (GST). The GST rate is currently set at 15%. This tax is applied to the sale of goods and services at each stage of production or distribution, with businesses required to register for GST if their annual turnover exceeds a certain threshold.
Property tax: Property taxes are levied by local governments in the Cook Islands. Rates vary depending on the location and value of the property. Residential properties are typically taxed at lower rates compared to commercial properties, and exemptions or rebates may be available for certain categories of properties such as agricultural land or owner-occupied residences.
Payroll tax: There is no specific payroll tax in the Cook Islands. However, employers and employees contribute to social security schemes, which are funded through various mechanisms including payroll deductions and government subsidies. These contributions go towards funding pensions, healthcare, and other social welfare programs.
Tax deductions and credits: The Cook Islands may offer certain deductions and credits to individuals and businesses to reduce their tax liability. These may include deductions for charitable contributions, education expenses, and investment incentives such as tax holidays or accelerated depreciation for capital investments. Additionally, tax treaties with other countries may provide for tax credits to prevent double taxation on income earned abroad.
Tax compliance: Tax compliance in the Cook Islands is managed by the Revenue Management Division under the Ministry of Finance and Economic Management. Efforts are made to ensure efficient tax collection and enforcement through measures such as taxpayer education, audits, and penalties for non-compliance. The government also collaborates with international agencies to combat tax evasion and money laundering.
Tax burden: The overall tax burden in the Cook Islands is relatively moderate compared to many other countries. However, the distribution of the tax burden among individuals and businesses may vary based on income levels and economic activities. High-income earners and profitable businesses may bear a larger share of the tax burden, while lower-income individuals may benefit from targeted social welfare programs funded by tax revenues.
04 Jul 2024
19 Jul 2024
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