LLC's were first introduced into TCI law by the Companies Amendment Ordinance of 1994. They are effectively hybrids between partnerships and companies. They afford limited liability to members and are specifically designed to be treated as partnerships for tax purposes - i.e. tax-transparent with income/dividend distributions being attributed to the members without the imposition of corporation tax.

Turks & Caicos LLC's differ from ordinary companies  in that they have limited life (typically 50 years with a right to extend for a further 50 years) thereby avoiding the corporate characteristic of perpetual existence. 

Existing TCI exempted companies (IBC's) can be registered as LLC's by applying to the Registrar of Companies annexing a Special Resolution limiting the life of the company to 50 years and changing the company's name to include the suffix "LLC".  This is a simple and inexpensive process if you have an existing TCI company or an IBC which you wish to continue into the islands in order to change its nature to that of an LLC.    Feel free to contact us if you are interested in availing of this option and we will be happy to provide you with further information on the costs and other considerations involved.

How are they used?

Several multinational companies have utilized TCI LLC's as vehicles to raise capital from US investors by the issuance of preference shares.  The proceeds of the sale of the preference shares are then lent to the issuer's (on-shore) parent company.  Because the parent company has effectively borrowed monies from its TCI subsidiary, it can treat the entire of the monies so raised as an ordinary tax-deductible loan thereby significantly reducing its overall tax exposure.  Furthermore, as noted above, because LLC's can be classified as partnerships the TCI subsidiary avoided withholding taxes on the interest payments.  By contrast, for normal US tax purposes if preference shares had been issued directly by the multinational, it could only deduct the interest costs of the preference share offering but not the dividends paid on the stock.

In a nutshell, parent companies using TCI LLC's avoided "dividends" on preferred shares by treating payments as interest for tax purposes.  Reducing exposure to taxation in this way meant the relevant multinational could build its capital reserves more rapidly than would otherwise have be possible.

We would be delighted to discuss the other potential benefits with individuals and/or their tax advisors and will provide further more detailed information on the possibilities afforded by TCI LLC's.   Should this area be of interest to you, send us a brief email requesting further information or outlining your current situation and objectives and we will get back to you as soon as we can.