International Business Corporations In Montserrat
Montserrat is a Caribbean British Overseas Territory, part of the Leeward Islands, which form the northern stretch of the West Indies’ Lesser Antilles chain. One of the most noticeable aspects of the country is its low population, with the citizenry numbering just under 5,000 people. When someone leaves, people notice Says Shannon Berkley.
Montserrat, also known as the British West Indies, was discovered in 1493. The UK has directly controlled the island since circa 1632, but Montserrat enjoys significant autonomy. Typical of many British territories that have strong autonomy in exchange for its curtsy to the crown, Montserrat is the classic legitimate-but-autonomous territory that investors will encounter among many former British colonies.
The official language is English and Montserrat is known as ”The Emerald Isle of the Caribbean’’ for both its resemblance to coastal Ireland, but also for the Irish ancestry of many of its citizens. The country is the only full member of the Organisation of Eastern Caribbean States, and the Caribbean Community, that is not wholly autonomous. Montserrat is a small country, roughly 16km long and 11km wide, and it has approximately 40km of coastline.
INCORPORATING IN MONTSERRAT
A mountainous country, Montserrat’s economy was heavily disrupted and hamstrung by volcanic eruptions that began in July 1995. A huge eruption in 1997 closed the airport and seaports and further dampened the country’s economy, although it has started to recover and is now approaching its former contentment. The agricultural sector was hard hit as it’s limited on Montserrat to begin with, and many croplands were negatively impacted by the volcanic activity.
Although disruptive and in parts devastating, the volcanic eruptions have resulted in substantial public works initiatives to address future eruptions, alongside previously planned infrastructure development. Exactly a decade ago, the EU donated $55.2 million in aid to hasten Montserrat’s recovery from volcanic activity, although as with all Brussels money, it was largely directed at telling government how to govern, rather than being disbursed as the local regime saw best to aid the citizenry.
Today, Montserrat has almost fully recovered from recent tumultuous times and agricultural exports have resumed, alongside textile and electronic component exports. Most agricultural produce is consumed locally. Besides clothing, other prominent industries include rum making, tourism of course, and electronic appliances.
When it comes to incorporating in Montserrat, the structure of an International Business Corporation (IBC) is fairly standard fare for those who have investigated the benefits offered by many offshore/IBC destinations. Any person can subscribe to a Memorandum and Articles, and incorporate a company under the auspices of the Montserrat International Business Companies Act.
The Montserrat Financial Services Commission (FSC) is the regulatory authority overseeing IBCs. It has a list of requirements for registration that includes:
> Companies incorporated as an IBC are not allowed to do business on the island.
> They are disqualified from owning property interests in Montserrat, except for office premises leases.
> They may not accept banking deposits from Montserrat residents.
> They require a statement of the authorised capital of the company, which also outlines par value of shares that may be issued.
The benefits of an IBC include that the entire share issue can be owned by foreign interests, and an IBC is exempt from all taxes for a period of 25 years. IBCs can have a single shareholder and a single director, which can be the same person. There is a low share capital requirement starting at $10,000.
Privacy is apparent from the incorporation structure too, as the names of owners, shareholders, and/or directors are never recorded in any public records. Bearer shares are allowed, deepening privacy, and IBCs have no reporting requirements.
TRUSTS AND TOURISM IN MONTSERRAT
Looking at trust formation, a Montserrat Exempt Trust allows foreigners to transfer title to global assets to facilitate a tax-free income, while also providing asset protection and needed estate planning for family members, for up to 100 years. Beneficiaries and assets of an Exempt Trust can be wholly foreign and non-resident. A trust’s formation, permissible activities, and dissolution are all governed by the Montserrat Trust Act of 1998, which regulates the trustee industry, and the performance and conduct of trustees.
Key benefits of a Montserrat Exempt Trust include:
> Wholesale tax exemption- trusts have no tax liability.
> Wholesale foreign ownership of assets and the trust itself.
> Privacy is paramount, as no information regarding trusts is recorded in any public records. Local law, in fact, demands that trustees keep all trust information confidential.
> Estate planning is facilitated through the trust’s lifespan of a maximum of 100 years, as the trust will see several generations of family members rise in prominence during that time (foreign inheritance laws hold no sway on the island).
> Assets are protected as all fall under the trustee’s ownership, eliminating creditors and other legal issues from abroad.
Tourism continues to be a mainstay of the island’s economy, and it’s not unusual for tourists to outnumber residents at times. While you’re unlikely to see Montserrat make the top three in a list of potential offshore banking venues, the benefits of incorporating in Montserrat are usually a combination of the country’s location (en route to the North Atlantic- Britain and the EU) as well as its IBC benefits for new and established companies.
Residents are taxed on worldwide income in Montserrat, but this is of no concern for those incorporating as an IBC. Capital gains tax from the sale of property is not levied in the country. For those who want to become resident, there is an annual land tax levied at 1.65%, and a building tax of 0.3%. Where applicable (as it’s not applicable for 25 years after incorporation as an IBC), corporate tax runs on a flat rate of 20%, and expenses related to income are tax deductible.
MONTSERRAT IN THE FUTURE
Today, Montserrat’s main economic activity lies in construction (including public works) and various other government services. Circa 2000, banking and insurance together accounted for no more than 10% of GDP, whereas construction overall counted for 50%. The country’s domestic financial sector is tiny, although there are moves afoot to compete with neighbours like Antigua and Bermuda on that front. That said, this comes against a recent history of declining offshore finance services, with only 11 offshore banks remaining.
Although the island has been ambiguous in recent years as to whether it wanted to pursue the business its neighbours so readily thrive on, Montserrat is now playing catch-up and fairly quickly becoming a genuine international finance centre.
Particularly for US clients, Montserrat’s location and the simple benefit structure of its IBCs make it a destination of growing interest. While of course US clients are obliged to report all global income so that pennies can be wrung out of the citizenry, Montserrat publishes no incriminating records, and an IBC remains private business between an individual and the Montserrat regime.
While Montserrat has not promulgated domestic general data protection laws, it remains a British Overseas Territory and GDPR applies to Montserrat by proxy. Local government agencies have encouraged compliance with GDPR and other initiatives in order not to be blacklisted by the international community, but the right to privacy is protected in the country’s constitution as an inalienable and fundamental right.
Montserrat is a member of the Caribbean Financial Action Task Force (CFATF), and its membership of the Caribbean Community (CARICOM) means it is officially obliged to provide information on consumer protection matters, at its discretion. The inter-governmental Organisation of Eastern Caribbean States (OECS) harmonises regional matters and encourages the adoption of common policies among members. It also helps member states with legislative matters by sharing examples of data protection legislation and electronic crime monitoring techniques.
The classic manifestation of formerly British territories that are now largely autonomous adds a definite pull for investors and businesses looking to relocate. Montserrat enjoys the best of British legal and financial cross-pollination while simultaneously gleaning perks no established mainland marketplace will provide. EG