Bermuda

Business Environment
The principal forms of business entity operating in Bermuda are companies, partnerships, and trusts. Bermuda exempted and permit companies (those registered in another jurisdiction, but doing business from Bermuda) receive an undertaking from Bermuda that they are not subject to tax or duty on profits or income capital, gains or appreciations and that no inheritance tax or estate duty will be payable on shares debentures or other obligations of the company. The current exemption extends until 2016 but may be extended at the discretion of parliament. Exempt companies are defined as exempted from the Bermuda law that restricts foreign ownership in local companies to 40% of issued share capital. Exempted companies may not do business within Bermuda unless they obtain special permission.

Registered companies require a minimum of one shareholder. Bearer shares are not permitted. The beneficial ownership of the company must be revealed to the Registrar of Companies in confidence. Bank references must be provided for beneficial owners. A minimum of three directors is required. Meetings of directors and of shareholders may be held off the island. A register of directors and officers must be maintained. A minimum issued capital of US$12,000 is required in the case of exempted companies. If the company is not conducting insurance business, there is no minimum amount for paid-up capital. The company must maintain a registered office address within Bermuda, must appoint a Bermuda resident company secretary, and must also appoint at least two resident directors so a quorum can be formed in Bermuda.

Bermuda has a mutual legal assistance treaty with the US regarding assistance in the prevention of tax fraud and the evasion of taxes. The US-Bermuda treaty contains a special exception to the exchange of information rules. The exception applies to information protected by local bank confidentiality laws and allows the information to be withheld if such information is sought solely for civil tax purposes. If criminal tax charges are brought by the US or Bermuda, the exception does not apply.

The Bermuda Monetary Authority is responsible for the licensing and regulation of insurance companies, banks, deposit companies, trusts and investment businesses, the issue and redemption of notes and coins, and the vetting of individuals and entities setting up corporate entities in Bermuda.

Bermuda was not on the Financial Action Task Force's blacklist as 'non-cooperative' in preventing money laundering. In May 2000 Bermuda signed a letter of commitment with the Organisation for Economic Co-operation and Development agreeing to exchange information with overseas authorities in criminal tax matters by 31 December 2003 and in civil tax matters by 31 December 2005.

Taxes
Bermuda does not tax profits, dividends, or income. There is no capital gains tax or gift tax. Exempted companies, exempted partnerships, and overseas companies pay no stamp duty except on the transfer of Bermuda property. Companies providing corporate services are taxed at a rate of 4% of the total revenue earned.

In addition to company fees, all companies pay payroll tax of 12.75% with the employer allowed to recover a total of 4.75% from each employee in Bermuda. Businesses get a $2,400 annual payroll credit per employee applied to payroll prior to tax calculation for companies with total payrolls over $200,000. Payroll tax extends up to a $250,000 cap after which no tax is paid. Stamp duty, layered at 5% (on amounts between US$50,000 to US$200,000), 10% (US$200,000 to US$1 million), and !5% (amounts above US$1 million), is payable on a deceased’s estate. The value of shares in an exempted company would not be included the calculations for stamp duty on the deceased’s estate unless the dead person was ordinarily resident in Bermuda.

The US and Bermuda entered into a tax convention in 1986 covering the taxation of insurance enterprises and an article relating to the mutual assistance in tax matters (see above). Under the treaty, insurance profits are not taxable in the other country unless the profits of the enterprise
are attributable to a permanent establishment in the other country. Link: Office of the Tax Commissioner: Guide to Taxes

Stock Exchange
The Bermuda Stock Exchange (BSX) is a fully-electronic market with 300 listed equities, funds, debt issues and depositary programs. The BSX operates two markets: a domestic market for Bermuda’s local companies and a market for international securities (whether issued by Bermuda-incorporated exempted companies or by non-Bermudian issuers). The BSX allows crossing trades in which a trading member handles both sides of the trade. Local companies are listed on either the main board or a small cap section. International companies may make a secondary listing in the international companies section or a primary listing on the mezzanine market, where the issue and trading of securities is restricted to ‘qualified investors’.

Deloitte & Touche: Guide to International Business in Bermuda
Deloitte & Touche, April 2002
Guide to Bermuda Incorporated Public Companies
Appleby Spurling & Kempe, PDF, July 2002

Contacts

The Registrar of Companies
Government Administration Building
30 Parliament Street
Hamilton HM 12
Bermuda
Tel: (441) 295 5151
Fax: (441) 292 6640
Internet: www.roc.bdagov.bm

Bermuda Monetary Authority
Burnaby House
26 Burnaby Street
Hamilton HM 11
Tel: (441) 295-5278
Fax: (441) 292-7471
E-mail: Info@bma.bm
Internet: www.bma.bm

Bermuda Stock Exchange
3 F. Washington Mall
Church Street
Hamilton, Bermuda
Mail: PO Box HM 1369
Hamilton HMFX
Tel: (441) 292 7212
Fax: (441) 292 7619
E-mail: info@bsx.com
Internet: www.bsx.com

Latest available figures

Country name
Bermuda. UK overseas territory

Population (2002 estimated)
62,000

Capital
Hamilton

Currency
Bermuda dollar, pegged at BD$1 to US$1

Legal system
Based on the British common law system with variations. Bermuda has magistrate courts, and a Supreme Court consisting of the high court and the court of appeals. Final appeal rests with the UK Privy Council in London.

Government
British overseas territory. Representative democracy with internal self-government. The British monarch is the head of state represented by a UK-appointed governor who is responsible for defence and internal security. Parliament is made up of a lower 36-member House of Assembly and an 11-member Senate. House of Assembly members are directly elected for five years from single-seat constituencies. The governor appoints the Senate on the advice of the government and opposition parties. The premier is chosen from the majority party and appoints a cabinet of no more than 14 members.

Executive
Governor: Sir John Vereker (from 1 January 2002).
Premier: Alex Scott

Cabinet
Deputy premier, tourism, transport and : Ewart Brown
Finance: Paula Cox
Education: Terry Lister
Works and engineering, housing: Ashfield DeVent
Health and family services: Patrice Minors
Attorney general, justice, legislative affairs: Larry Mussenden
Telecommunications and e-commerce: Michael Scott (senator)
Environment: Neletha Butterfield
Home affairs and immigration: Randolph Horton
Community and cultural affairs and sports: Dale Butler

Political parties
Progressive Labour Party (leader Alex Scott)
United Bermuda Party (leader Grant Gibbons)
National Liberal Party (leader Dessaline Waldron)

Elections
In the elections held 24 July 2003 the Progressive Labour Party (PLP) received 51.6% of the vote and holds 22 seats while the United Bermuda Party (UBP) won 48% of the vote and holds 14 seats. Link: Election results.

Economic overview
Bermuda’s international sector is the largest contributor to GDP, with tourism a close second. The island has fostered a competitive market for insurance and reinsurance companies. International business made up 15.3% of total GDP in 2002, and is estimated to have had real growth of 0.9% for the year compared to 2001. The number of Bermuda-registered companies remained virtually unchanged in 2002, increasing to a total of 13,318 at the end of 2002 compared to 13,286 at the end of 2001.

Gross domestic product (2002)
1% real growth

External reserves
US$638 million (second quarter 2000)

Exports of goods (2000)
US$51 million

Imports of goods (2000)
US$719 million

Services balance (2000)
International business: US$837 million. Tourism: US$218 million.

Balance of payments current account (2000)
US$197 million

Industry
Tourism, international business (especially insurance and reinsurance and related services), and financial services.

Inflation rate (CPI) (January 2003)
3% annual rate

Labour force (2000)
37,472 jobs of which an estimated 19.5% are held by non-Bermudians. Official unemployment is minimal.

Government accounts (2003/2004)
Revenues: US$650.1 million. Total expenditures: US$729 million of which US$103.4 million is allocated toward capital projects. Financial year: April-March.

Public debt (2003 projected)
Net borrowing: US$208.5 million

Public holidays (2004)
1 January (New Year), 9 April (Good Friday), 24 May (Bermuda Day); 8 June (Queen’s birthday); 29 July (Emancipation Day/Cup Match); 30 July (Somers Day/Cup Match); 6 September (Labour Day); 11 November (Remembrance day); 25 December (Christmas); 26 December (Boxing Day).

Time
GMT minus 5 hours. Current Time (World Time Server)

Sources
Government of Bermuda
Bermuda Monetary Authority
The Bermuda Stock Exchange
Ernst and Young (Doing Business in Bermuda (PDF).
Holiday Festival