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Bermuda: Country and Foreign Investment

Executive Summary

This page was last updated on 1 August 2019.

Bermuda is not in the Caribbean

Bermuda is a mid-Atlantic archipelago just over 1,000 km east-southeast of North Cartolina, USA – it is not in the Caribbean, which is 1,500 km to the southwest. Bermuda is a politically stable, self-governing Crown dependency. English is the official language and the currency, the Bermudian dollar, is at parity with the US dollar. The climate is warm and humid, though sea breezes temper the high summer temperatures. Population is 63,700 (January 2019 est.) and has recently been fluctuating. The islands are rich: Bermuda's GDP in 2017 was approximately US$5.85 billion, giving a GDP per head of more than US$94,000.

Buoyant Economy 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 GDP. Tourism is also important with more than 400,000 visitors a year, most of them from the USA. The Bermuda Stock Exchange (established 1973) trades electronically and provides global access to its settlement systems. In 2012, Bermuda counted four banks, only one of them being local.

Bermuda's Low tax Specialisations

Bermuda has particularly strong insurance, investment fund and trust sectors, with very well-developed advisory and financial infrastructure. The Bermudian 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 has put effective legislation in place to develop e-commerce in Bermuda.

No Income Tax in Bermuda!

There is no income tax, capital gains tax, VAT, sales, use 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 administrative 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 blacklist of uncooperative jurisdictions. In April 2009, Bermuda was placed on the OECD's 'grey' list, but removed on 8 June 2009, following the signing of a tax information exchange agreement with the Netherlands.

 

 

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