Bermuda
Commercial Trading Companies
Given
its small size and distant location, Bermuda
is not suited to be a base for physical
warehousing, processing or distribution
into the vast EU and US markets that lie
on either side of it. Financial services
have therefore understandably tended to
dominate the island's business development
in the last quarter of a century.
However,
the US Foreign Sales Corporation legislation
opened up a window of opportunity for
Bermuda. The FSC rules were designed to
encourage US corporations to export more,
and in effect they exempt from tax part
of the profits earned from exports if
the FSC (the export conduit company) is
located in a 'qualifiying jurisdiction',
which Bermuda is, and maintains an office
and records in the jurisdiction, along
with some other conditions.
However,
this source of business disappeared when
the FSC legislation was repealed in 2004
along with its successor, the 'ETI'.
It
is sure that the advent of the Internet
and e-commerce has opened up a highly
attractive new line of business for offshore
jurisdictions which like Bermuda have
sophisticated business infrastructure
and good Internet facilities. In fact,
the Government has made a point of passing
comprehensive e-commerce legislation,
and has very publicly committed itself
to developing the e-commerce sector.
For
a company with B2C or B2B trading operations
in high-tax countries, this means that
large parts of its sales, marketing and
procurement activities can be based in
a low-tax area such as Bermuda. Distribution
of physical goods in high-tax areas can
be outsourced, and distribution of digital
goods (eg software or music) can take
place from Bermuda itself. Corporate structures
can be adjusted so that profits do not
have to be remitted to the high-tax jurisdiction.
At least one major software and systems
supplier has moved its distribution division
to Bermuda lock, stock and barrel.
See
Offshore-e-com.com
for extended descriptions of how businesses
can take advantage of the combination
of offshore and e-commerce, and see E-Commerce
In Bermuda for more details of the
facilities that are available on the island.
The
Companies Amendment Act 2006, which was
passed late that year, included the creation
of a system of registration for companies
with Non-Roman secondary names, the removal
of the minimum share capital requirement
and the extension of the rights of a natural
person (companies having unrestricted
objects) to companies incorporated in
Bermuda. Also covered by the Amendment
Act were the creation of a system which
would facilitate the delivery of electronic
records, provision for the indemnification
of directors and the implementation of
treasury shares.
At
the time of writing, the Bermuda government
listed a number of other ongoing legislative
initiatives in the area of e-commerce,
including: Data Protection Legislation;
Revisions to the Electronic Transaction
Act and Standard Government Certificate
Authority; Public Safety Electronic Emergency
Messaging; an E- Mentoring Project; Top
Level Domain Initiatives; and a Business
Technology Community Consultation.
