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Lowtax
Network Content Update | Issue XXVI | 28 February 2008 |
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Offshore
Aruba is a small (75 sq m) island off Venezuela with a population of 87,000. It separated from the Netherlands Antilles in 1987; they both still form part of the Kingdom of the Netherlands. The legal, political and administrative systems are largely modelled on Dutch originals, but there has been some common law influence on the offshore regime. Government, Judiciary and Central Bank are established in Oranjestad, the capital. Dutch is the official language, but English is often spoken; the local language is Papamiento, a Creole dialect. The local currency is the florin, fixed at 1$US = 1.79 Af. There is a well-connected airport near Oranjestad. Aruba is an associated territory of the EU. The Aruban economy is very open and is highly dependent on tourism and offshore financial services. Most goods are imported since there are few natural resources. An important refinery was shut for a while but is now open again, mostly for trans-shipment. GDP per head was US$21,800 at PPP by 2004, making it one of the highest levels in the region; economic fundamentals are good and unemployment is low enough to create labour shortages. Local taxes are quite high for residents, but there is a well-developed offshore sector which originated in World War Two as a haven for Dutch companies fleeing the German occupation of the Netherlands. Many financial links are to the Netherlands in one direction and to South America in the other. The financial and professional infrastructure is well-developed, with a Dutch (civil law) cast. Banking, licensing, insurance and holding companies are the main offshore sectors. The tax burden on most offshore activities is light but not minimal. There is a Free Zone which has successfully attracted manufacturing companies with markets in the EU and the Americas. Aruba has a tax treaty only the Netherlands, which gives access to the many Dutch tax treaties and good withholding tax regime. There is no banking secrecy legislation as such, but beneficial ownership of offshore companies does not have to be disclosed. The jurisdiction normally responds to requests for help on tax matters, although local professionals do what they can to maintain confidentiality. A New Fiscal Framework introduced alongside a new Dutch Tax Treaty (BRK) in response to international pressure as from 1st July 2003 abolished the distinction between offshore and onshore companies, but installed a generous participation exemption scheme which in effect maintains previous tax privileges for non-Aruban business activities. Learn more in our full Aruba Knowledgebase. |
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Offshore
Bermuda Not in The Caribbean Bermuda is a mid-Atlantic archipelago 1,000 km from the USA; it is not in the Caribbean (1,500 km to the south). Bermuda is a self-governing Crown dependency. It is politically stable; English is the official language; and the Barbadian dollar is at parity with the US dollar. The climate is warm and humid; but sea breezes temper the high summer temperatures. Population is 66,163 (July 2007 est.) and growing despite limited land availability. The islands are rich: Bermuda's GDP in 2004 was over USD4.5 billion, giving a GDP per head of more than USD69,900. GDP growth in 2004 rose to 4.6%. Economy Buoyant Based on Financial Services and Tourism By excluding foreign banks until recently, Bermuda avoided problems and grew as a reputable international finance centre with three of its own widely-branched banks. Financial services account for a significant majority of GNP; tourism is also important, with more than 400,000 visitors a year, mostly from the US. The Bermuda Stock Exchange (established 1973) trades electronically and provides global access to its settlement systems. Bermuda's Lowtax Specialisations Bermuda has particularly strong insurance, investment fund and trusts sectors, with very well-developed advisory and financial infrastructure. The Bermuda captive insurance sector is the world's largest. Hamilton is a British port of registry. There is a sophisticated infrastructure including the major international law and accounting firms. The Government intends to encourage the development of e-commerce in Bermuda and has put effective legislation in place. No income tax in Bermuda! There is no income tax, capital gains tax, VAT, sales or use tax or wealth tax. Annual government fees are imposed on businesses and there is a payroll tax. Local businesses must be controlled by Bermudians but offshore operations take place through 'exempt' or 'permit' companies. Due to an error in Brussels, Bermuda is not subject to the EU's Savings Tax Directive. Immigration Controlled by Housing and Work Permits With space severely limited, the Government controls access to Bermudian housing and jobs through systems of permits which encourage suitable business development but otherwise discourage immigration. Government moves to introduce strict quotas enforcing the employment of local workers are seen as negative by business and have not been effective. Bermuda Not On OECD Black-List In June 2000 Bermuda signed a letter of commitment to the OECD agreeing to conform with international standards of transparency and financial supervision. As a result it was not included on the OEDC's Financial Action Task Force 'Black-List' of unco-operative jurisdictions. Learn more in our full Bermuda Knowledgebase. |
