Falkland Islands Tax Frequently Asked Questions

Introduction

This guide is a place for a selection of Frequently Asked Questions on Falkland Islands Taxation. They have been devised based on questions that we have often been asked or provide details that don’t warrant their own separate guide. 

Albatross Tax are always happy to answer generic questions around FaIkland Islands taxation and suggestions to include further FAQs.

Do I have to pay tax in the Falkland Islands?

If you’re bothering to read this website, the likelihood is that you are working and living in the Falkland Islands or have a company that is, or you are considering doing so.

Generally speaking, you pay tax where you live and work, so living and working in the Falkland Islands is likely to create a taxable presence. There are various exceptions to this depending on your circumstances, the Double Taxation agreement with the UK limits it in certain areas and there is a general exemption if you’re in the Falkland Islands for a short time. 

I’ve received correspondence from the Falkland Islands Tax office saying I owe tax (or may do), what should I do?

If you agree that you owe it, my advice would be to pay it within the time limit specified or, if it has passed, as soon as possible. 

In any other circumstance you should contact us so we can provide initial advice.

An initial consultation to consider the basic issue at hand is free.  

I wasn’t aware I had to pay Falkland Islands tax, what can I do?

This is not an uncommon occurrence; you should contact us so we can consider your circumstances and advise. We can then work out what tax you should have paid and when, file the relevant returns and arrange for payment (if appropriate). 

Does the Falkland Islands tax office charge penalties?

Yes it does, there are various failure to file penalties for companies and individuals that increase over time and are payable in all circumstances where there is late filing. They start at £100 and increase based on time and the amount of tax outstanding. They can be as large as 20% of tax not paid plus £1000.

You may also be prosecuted.

In addition, interest is charged on any payments made late, the rate tracks the Standard Chartered loan rate and can be quite high. Interest can easily rack up over a number of years, especially when the rate is 10%+ (as it is currently). 

How would the Falkland Islands Tax Office know about my activities?

The Falkland Islands has the population of a medium sized village in the UK, there is little chance that you could fall below the radar.

Like anywhere in the world, arrivals and departures are monitored so they know who is in the country at any time. In addition, it is unlikely that the work you do in the Falkland Islands isn’t for someone else in the Falkland Islands, who probably would like the payments made to you as a deduction against their own FI tax. 

There is almost always a trail. 

I pay tax in the UK, is the Falkland Islands not part of the UK tax system?

No it is not. The Falkland Islands are a British Overseas Territory and has control over its own tax affairs. It has its own legislation and if you are living and/or working in the Falkland Islands it is recommended you consider your tax status carefully.

Is Falkland Islands Tax Legislation the same as the UK?

No. Albatross Tax has experience of both tax systems, whilst it seems similar there are many subtle differences and you should always consider the Falkland Islands Tax Legislation as the only source of tax legislation when filing your FI return.

What will happen if I don’t pay Falkland Islands tax?

The Falkland Islands tax office has 20 years to issue assessments if there is either fraud or neglect, and six years in all other circumstances. In those 20 years you will be accumulating interest.

I can no longer speak for what the tax office might do (I no longer work there) but they may try and gather information or prompt you to interact with them, register and pay and file.

If you do not, they will issue estimated assessments. 

Is there capital gains tax in the Falkland Islands?

On the whole there is no capital gains tax or any wealth taxes in the Falkland Islands. 

There are a few exceptions related to gains regarding oil and fishing quotas but overall there are no general capital gains on shares, property, etc. 

Do the Falkland Islands pay VAT (Value Added Tax)?

There is no VAT in the Falkland Islands or any equivalent. Aside from income and corporate taxation and duties on tobacco and alcohol there is no tax or duty on anything else you are likely to come across. 

Are there customs and excise duties in the Falkland Islands?

Aside from the usual duty on alcohol and tobacco, there are no customs or excise duties. 

It is quite common for some nations to have quite hefty import duties on most things, such as importing a car or any goods. This may include VAT or individual excise duty on various classes of goods. The Falkland Islands does not, and you may import anything you require .

Can you use British pound in Falkland Islands?

Yes you can. 

Falkland Islands Pounds (FKP) and GBP are interchangeable and whilst the Falkland Islands has its own hard currency, it is similar in look to the UK (except the notes, which are still made from paper). UK currency circulates freely in the Falkland Islands and you are likely to receive it in your change.

FKP notes and coins are not spendable in the UK. 

From a tax perspective, GBP and FKP are fundamentally the same. 

Is the Falklands tax free?

No it is not. It has its own tax system based primarily of income and corporation tax. It has relatively little other taxes, such as VAT, so beyond a relatively moderate tax rate on your income or corporate profits there is little beyond this.