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5.5. Source Rules with Respect to Income Derived by Non-Residents

Any income earned by a non-resident from Cook Islands sources is subject to tax in Cook Islands. Taxes are collected through withholding tax which is deemed to be the final tax on such income.

According to the Tax Act, the following income categories are deemed to be sourced from the Cook Islands:

  • income derived from any business carried on in the Cook Islands;
  • income derived by any person as the owner of land in the Cook Islands;
  • income derived by any person from money lent or used in the Cook Islands (whether on security or otherwise);
  • income derived from shares in or membership of a Cook Islands company, or from debentures issued by a Cook Islands company or by a local or public authority;
  • income derived from debentures or other securities issued by the Government of the Cook Islands, or from any contract made with the Government of the Cook Islands;
  • income derived from the sale or other disposition of any property, corporeal or incorporeal, situated in the Cook Islands;
  • income derived by a beneficiary under any trust, so far as the income of the trust fund is derived from the Cook Islands;
  • income derived from contracts made or wholly or partly performed in the Cook Islands;
  • income derived from the carriage by sea or by air of merchandise, goods, livestock, mail, or passengers shipped or embarked in the Cook Islands;
  • royalties and other like payments of any of the kinds referred to in section 46(1) (e) and payments of any of the kinds referred to in section 46(1) (f) being royalties or payments:
    • that are paid by a person who is resident in the Cook Islands and are not paid in respect of a business carried on by the person outside the Cook Islands through a fixed establishment outside the Cook Islands; or
    • that are paid by a person who is not resident in the Cook Islands and are deductible by the person in calculating the person's assessable income for the purposes of taxation in the Cook Islands; and
  • income derived directly or indirectly from any other source in the Cook Islands.