Economic Overview
Almost the whole area of the two main islands, outside of Stanley, is devoted to sheep farming. The wool is sold in Great Britain and is the Falklands’ leading land-based export.
In the late 20th century the government instituted policies to encourage an increase in the number of smaller, locally operated farms rather than
corporate-owned farms. Attempts were also undertaken at that time to diversify the islands’ economy. Such efforts have enabled the islands’ economy to enjoy sustained growth since the late 20th century.
Nowadays, fishing and tourism comprise the bulk of economic activity.
The largest employment sector on the Islands is the Falkland Islands Government – accounting for 28% of all employment. Other significant employers in the Islands are agriculture (11%), hospitality and tourism (11%) and transport and communications (12%).
Main sectors
Fishing
The introduction of a Fisheries Conservation Zone and fisheries management regime in 1986 transformed the economy of the Falkland Islands. Nowadays, fishing is the largest part of the Falkland Islands’ economy: it accounts for 40% of the GDP.
Tourism
Tourism is the second-largest part of the economy. Main attractions are the scenery and wildlife conservation including penguins, seabirds, seals, and sea lions, as well as visits to battlefields, fishing and wreck diving.
Moreover, the islands have become a regular port of call for the growing market of cruise ship to Antarctica and elsewhere in the South Atlantic.
Agriculture
Much of the Falkland Islands land mass is used for agriculture. Farming in the Falkland Islands is described as an extensive rangeland farming system.
The uniqueness of the environment also produces challenges, and it is towards these that the DoA (Department of Agriculture) directs much of its advisory and research efforts and resources.
Taxes in the Folkland Islands
Falkland Islands resident companies are subject to Corporate Income Tax (CIT) on their worldwide income and gains. Non-Resident Companies that derive income from Falkland Islands sources are also subject to CIT, but only on that income.
CIT is imposed at a rate of 26%. A lower rate of 21% may apply for any non-ring fence income of less than £1 million in a 12 month period, however allring-fence income is taxed at the full rate of 26%.
There is no Withholding Tax (WHT) levied on dividend payments made by a Falkland Island tax resident company.
Interest Withholding Tax of 10% may be applied to annual interest payments made by a resident in the Falkland Islands to a non-resident payee. However, WHT will not apply where the payee is tax resident in a country included on a specified list of countries which are not low tax territories.
Royalties WHT of 10% is applied to certain types of royalty payments made by a resident in the Falkland Islands to a non-resident.
The Falkland Islands currently has only one double tax treaty in force, with the UK; this allows for the elimination of WHTs on interest and royalties in certain cases.
There is currently no VAT regime in the Falkland Islands.
Investing in the Folkland Islands
The Falkland Islands economy has grown steadily from the 20th century, driven largely by revenues from fisheries and offshore oil exploration.
Top Reasons why to Invest in the Falkland Islands:
1. Resilient economy despite the uncertainty in the global economy;
2. Increasing investment and trade;
3. Developing of entrepreneurship and small businesses;
4. Meeting of international standards on tax co-operation and financial sector regulation and combating of financial crime, bribery and corruption;
5. Green Growth: the Falkland Islands remain committed to the sustainable management of the environment on which much of its economy depends;
6. Strengthening of relationships with the EU, Commonwealth and other international organizations;
7. Strengthening of the Public financial management.