THE ESTABLISHMENT OF AN OFFSHORE BANK

by admin on March 4, 2017

Foreign real persons and corporate bodies may apply to the Ministry responsible for economic matters
for the purpose of carrying on offshore banking operations.

• Real persons or corporate bodies intending to establish an offshore bank shall be; nonresidents, residents of or carrying on business in Turkey, OECD Countries or countries having diplomatic relationship with TRNC and holding the control of a bank directly (at least 51% of the shares) or indirectly. Corporate bodies shall have a valid business permission obtained from the authorities of banking operations in these countries.
• Documents to be submitted on application and establishment and the contents thereof shall be specified in regulations to be issued by the Council of Ministers.
• Charge payable on application is US$ 1,000, which has to be deposited at the Central Bank.
• The Ministry responsible for economic matters evaluates applications and if deemed suitable gives a provisional licence within 10 working days after receiving the views of the Central Bank.
• Minimum cash paid-up capital required of offshore bank is US$ 500,000.Upon payment of the cash capital into a blocked account at the Central Bank the provisional licence is rendered absolute.
• Offshore banks which have been issued with a provisional licence are caused to be registered with the Official Receiver and Registrar after completion of requirements provided for the

Companies Law.
• Having received the provisional licence and completed the registration procedures, an offshore bank must deposit US$ 20,000 to the Revenue and Tax Office as licence fee. This amount of licence fee has to be deposited every year in January. Otherwise the banking licence shall be deemed invalid.

• An offshore banking unit must, within three months at the latest after receipt of the provisional licence, specify its place of business and be fully staffed. In addition the unit has to submit an approval certificate obtained from the Official Receive and Registrar, the opening balance sheet approved by an authorized auditor and the certificate of deposit of licence fee to the Ministry responsible for economic matters in order to obtain a business licence.
• Offshore banks shall perform all banking operations with non-residents.
• Offshore banks have to submit the personnel list to the Ministry responsible for economic matters after beginning business. At least one of the General Director or Assistant General Directors and minimum half of the personnel has to be resident and national of TRNC.
• Offshore banks shall perform their international banking and other financial dealings freely and independent of the taxation and financial provisions in force in the TRNC.
• Offshore banks may transfer abroad earnings and resources they have secured freely.
• Offshore banks shall be subject to tax at a rate of 2% on taxable income to be ascertained under the provisions of the Corporation Tax Law and Income Tax Law.