23 Dec 2010

Outlying Cook Islands to be declared tax-free

3:05 pm on 23 December 2010

The Cook Islands' new finance minister says outlying islands will be declared a tax free zone within the next financial year.

The comment follows the country's long term credit downgrade by the global ratings agency Standard and Poor's from BB to BB minus.

Mark Brown says although the rating's not too favourable in that it sends a message to partners in the international community, he's more concerned about boosting the economy than seeing the previous rating restored.

He says keeping people in the country's a critical part of doing that.

"It doesn't have any impact on government's revenue streams by declaring the outer islands a tax-free zone but it will have the effect of encouraging people to have second thoughts about leaving and staying on in the country, especially well-paid Cook Islanders such as teachers, doctors, nurses, and within the public service but also hopefully encourage more entrepreneurial activity to take place."

Mark Brown says the government's also looking at promoting the Cook Islands in the offshore finance industry.