Company and Jurisdictions
|The Companies Act, 1981.||Minimum authorised capital of USD 12,000 (or equivalent) and.|
|Annual government fees:||Corporate Taxation:|
|USD 1,780. Both initial/annual fees will be higher if minimum authorised capital is exceeded||Zero, until at least March 2016.|
|Time to incorporate:||Ready-made companies:|
|Minimum members:||Registered office required:|
|One, individual or corporate.||Yes, at address of a licensed management company or law firm in Bermuda.|
|Local registered agent:||Minimum number directors:|
|Yes.||Two, individuals only. A register of directors must be filed with Registrar and is open to public inspection.|
|Officer to be locally resident:||AGM required:|
|Annual return required:||Financial statements to be prepared and/or audited:|
|No.||Yes, but audit may be waived if all members and directors agree.|
|Balance sheets to be filed:||Share register required:|
|No.||Yes, at registered office|
|To be filed with Registrar:||Open to public inspection:|
|Exchange controls:||Redomiciliation permitted:|
|Yes, but Exempt Companies, as non-residents, are exempted.||Yes, in and out.|
|Language of incorporation:||Confidentiality:|
|English.||No specific statutory provisions in relation to companies, but a common law duty on professionals to keep affairs of clients confidential.|
|Bearer shares permitted:|
- Blue chip registration.
- Approved for listing purposes in Hong Kong.
- Very well regulated jurisdiction.
OECD Harmful Tax Practices
Bermuda was one of six jurisdictions that gave an advance commitment to the OECD, on 15 May 2000, to exchange information with overseas authorities in criminal tax matters by 31 December 2003 and in civil tax matters by 31 December 2005.
Tax Information Exchange Agreement (TIEA)
Bermuda signed a bilateral TIEA with the USA, which came into effect on 1 December 1988.
EU Savings Tax Directive
Not applicable (at present).
Financial Action Task Force (FATF)
Bermuda was not one of 15 countries or territories identified by the FATF in June 2000 as Non-Cooperative (NCCT) in the fight against money laundering.
Bermuda is a member of the Caribbean Financial Action Task Force (CFATF) and the Offshore Group of Banking Supervisors.
Mutual Legal Assistance Treaties (MLATs)
Bermuda has an MLAT 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.
Bermuda is not a party to any double tax agreements.
|Full Country Name:||Bermuda (former: Somers Islands)|
|Dependency status:||Overseas Territory of the UK|
|Area:||53.3 sq km (21 sq miles)|
|People:||Afro-Caribbean 63%, European 33%, Asian and Hispanic 4%|
|Languages:||English. There is also a significant Portuguese-speaking community|
|Currency:||Bermuda Dollar (BMD) – parity with US Dollar|
|Government:||parliamentary British Overseas Territory with internal self-government|
|Legal system:||English law|
|Head of State:||HM Queen Elizabeth II|
The islands and islets of Bermuda lie along the southern rim of the summit of a submarine volcanic mountain in the Western Atlantic. Bermuda, a group of about 138 islands and islets, lies 570 miles east of the coast of North Carolina. The eight main islands form a chain about 22 miles long, interconnected by bridges and causeways. The warming effect of the Gulf Stream makes Bermuda the most northerly group of coral islands in the world.
The Bermudas were visited in about 1505 by a Spanish sailor, Juan de Bermudez, and had been given the name 'La Bermuda' by 1510. Ferdinand d'Orviedo (also Spanish) sighted them in 1515. They remained uninhabited until 1609, when The Sea Venture, commanded by Sir George Somers on its way to Virginia with British settlers, was wrecked on reefs close to the eastern shores. The survivors were able to build two ships and continue their journey to Jamestown - bringing with them much needed supplies for Bermuda. News spread of the beauty and fertility of the islands, and in 1612 King James I and VI extended the charter of the Virginia Company to include them. The first emigrants went out in that year; others followed, and enslaved Africans were brought with them as house servants. The islands, which became known as Somers Islands, were bought about 1615 by some entrepreneurs from the City of London. The settlers became weary of the restrictions imposed on them by the Virginia Company and its successor the Bermuda Company. They took their case to London and in 1684 the company's charter was annulled, and government passed to the Crown. As elsewhere in the British empire, slavery was abolished in Bermuda in August 1834.
Government and Politics
|Head of State:||Queen Elizabeth II (since 6 February 1952), represented by Governor Sir John Vereker (since 11 April 2002)|
|Head of Government:||Premier William Alexander Scott (since 24 July 2003)|
|Deputy Prime Minister:||Deputy Premier Ewart Brown|
|Cabinet:||Cabinet nominated by the Premier, appointed by the Governor|
|Elections:||none; the Monarch is hereditary; Governor appointed by the Monarch; following legislative elections, the leader of the majority party or the leader of the majority coalition is usually appointed Premier by the Governor|
Bicameral Parliament consists of the Senate (an 11-member body appointed by the governor, the premier, and the opposition) and the House of Assembly (36 seats; members are elected by popular vote to serve up to five-year terms)
Elections: last general election held 24 July 2003 (next to be held July 2008)
Election results: percent of vote by party - PLP 51.7%, UBP 48%; seats by party - PLP 22, UBP 14
Supreme Court; Court of Appeal; Magistrate Courts
Attorney General and Minister of Justice and Legislative Affairs: Senator Larry Mussenden
Political parties and leaders
Progressive Labor Party or PLP (William Alexander Scott); United Bermuda Party or UBP (Grant Gibbons)
Bermuda is Britain's oldest colony and its Parliament, which first met in 1620, is the oldest legislature in the Commonwealth outside the British Isles. The 2003 election was followed by a period of infighting within the PLP culminating on 28 July 2003 with Jennifer Smith tendering her resignation as Premier and leader of the PLP. William Alexander Scott became the new leader of the PLP and was sworn in as the new Premier of Bermuda on 29 July 2003.
A referendum on independence was held in Bermuda on 16 August 1995. Over 58% of the electorate took part in the referendum. 25% voted for independence and over 73% voted against.
Basic economic facts
GDP (2003 est): US $2.33 billion
Growth rate (2003 est.):2%
Per capita GDP (2003 est.):US $35,000
Annual Growth: 0.5% (2002 estimate)
Main industries: Insurance, re-insurance, international finance, tourism, light manufacturing
Bermuda has enjoyed steady economic prosperity since the end of World War II, although the island experienced a mild recession in 2001-02, paralleling the recession in the US. Bermuda enjoys one of the highest per capita incomes in the world. Its economy is based primarily upon international business and tourism. The Bermuda Monetary Authority (BMA) estimated that those two sectors represented 75% of the total balance of payments current account receipts of foreign exchange in the first three quarters of 2003. However, the role of international business in the economy is expanding, whereas that of tourism is contracting.
Bermuda is considered a major offshore financial centre and has a reputation internationally for the integrity of its financial regulatory system. Bermuda first enacted specific money laundering legislation in 1997, passing the Proceeds of Crime Act (PCA) to apply money laundering controls to financial institutions such as banks, deposit companies, trust companies, and investment businesses, including broker-dealers and investment managers. Insurance companies are covered to the extent that they are judged susceptible to the risk of money laundering abuse. Amendments in 2000, effective 1 June 2001, expanded the scope of the legislation to cover the proceeds of all indictable offenses, including tax evasion, corruption, fraud, counterfeiting, theft, and forgery.
"Know your customer" requirements are basic to the PCA, which also provides for the monitoring of accounts for suspicious activity. Additionally, Bermuda reviews the fitness of persons seeking to undertake business on the island. The vetting process is undertaken when an entity is incorporated. The BMA requires that a personal declaration form be submitted for principals (beneficial owners) of international businesses prior to incorporation. Similar requirements apply to proposals to transfer shares. Additionally, a company must detail its business plan and maintain a register of shareholders at its registered office.
The BMA is also charged with oversight responsibility for trust service providers. Bermuda’s Trusts (Regulation of Trust Business) Act 2001 invests the BMA with full licensing, supervision and enforcement powers relating to persons who conduct trust business in or from Bermuda. The BMA routinely conducts on-site review visits to determine, among other things, compliance with anti-money laundering laws and regulations.
Collective investment schemes (CISs) are currently regulated pursuant to general regulations of the Bermuda Monetary Authority Act, and fund administrators are regulated persons for the purposes of the PCA. To strengthen regulation, however, CISs, including hedge funds, will be the subject of legislation anticipated for the summer 2005 session of Parliament. The proposed legislation will expand the definition of collective investment schemes to include, in addition to mutual funds and unit trusts, other business vehicles that pool and manage investment monies. It will require the licensing of fund administrators who will then be subject to minimum standards and a code of practice. The BMA will also be able to conduct compliance checks of PCA procedures as carried out by CIS administrators. However, the BMA will continue to apply differentiated requirements involving lighter regulation of schemes catering to institutional and sophisticated investors, with greater reliance on transparency and disclosure.
Bermuda enacted the Investment Business Act (IBA) in 1998 to regulate the island's financial services industry. In response to international directives, the government passed the Investment Business Act 2003 to further refine its terms. Bermuda is currently considering additional legislation to further enhance its compliance with international financial standards. The Bermuda Monetary Authority Amendment (No. 3) Act 2004 will clarify the authority of the BMA to respond to requests from overseas regulators for information about clients.
International business forms the backbone of Bermuda’s economy. The BMA reviews all proposals to incorporate companies and set up partnerships and also vets beneficial owners. As of 30 June 2004, 13,261 international businesses were registered in Bermuda, compared to 2,958 local companies. Of the international businesses, the majority are considered "exempted," meaning that they are exempted from Bermuda laws that apply to local entities, including those restricting the portion that can be owned by non-Bermudans. International companies include 12,151 exempted companies, 546 exempted partnerships, 545 nonresident international companies (incorporated elsewhere to do business in Bermuda), and 19 non-resident insurance companies. As of December 2003, there were 1,682 insurance companies. At the close of 2003, there were 1,321 mutual fund companies and 221 unit trusts in Bermuda. Offshore banking is not permitted in Bermuda. There are no free trade zones in Bermuda.
The majority of Bermuda’s exempt companies are shell companies with no physical presence on the island. Local directors (generally a local lawyer and secretary) are designated to manage corporate affairs in Bermuda. The owners and controllers are vetted by the BMA before exempted companies can be established or any shares transferred between nonresidents. The register of members is open to public inspection.
Bermuda regulates offshore companies and domestic companies equally from a prudential standpoint. The difference between the two is the ownership restriction. The government agreed to remove some minor distinctions between the two categories as part of its advance commitment to the OECD.
The Criminal Justice (International Co-Operation) (Bermuda) Act 1994, as amended in 1996, authorises the provision of assistance to foreign entities upon their request, including securing of evidence in Bermuda and overseas. The BMA Amendment (No. 3) Act 2004 clarifies the power of the BMA to cooperate with other overseas authorities. Its passage follows challenges in Bermuda courts on a specific case in which the BMA was assisting the U.S. Securities and Exchange Commission. Other Bermuda laws also authorise the sharing of information with overseas regulators: the Banks and Deposit Companies Act 1999, the Trusts (Regulation of Trust Business) Act 2001 and the Investment Business Act 2003.
Historically important for employment and tax revenue, Bermuda’s tourism industry is continuing to experience difficulties, although both the government and private sectors are working to improve it. In 1996, Bermuda welcomed 571,700 visitors to the island. By 2003, that figure had dropped to 482,673. Occupancy rates for 2002 averaged 55.1%, and were higher in the smaller hotels than at larger properties. Visitors contributed an estimated $475 million to the economy in 1996, but that figure declined to $342.5 million in 2003. Although per capita spending by air visitors rose to $333.5 million in 2001, the trend reversed in 2003, dropping to $291.8 million. Hurricane Fabian in September 2003 dealt another blow to the tourism industry.
Bermuda has little in the way of exports or manufacturing; almost all manufactured goods and foodstuffs must be imported. The value of imports rose from $551 million in 1994 to $746 million in 2002. The US is Bermuda's primary trading partner, with $567.5 million in US imports in 2002. The UK, Canada, and the Caribbean countries (mainly the Netherlands Antilles) also are important trading partners. Exports from Bermuda, including imports into the small free port that are subsequently re-exported, increased from $35 million in 1993 to $57 million in 2002 (provisional).
Duty on imports is a major source of revenue for the Government of Bermuda. In 2003-04, the government obtained $187.1 million, or 27%, of its revenue base from imports. Heavy importation duties are reflected in retail prices. Even though import duties are high, wages have kept up for the most part with the cost of living, and poverty appears to be practically nonexistent. Although Bermuda imposes no income, sales, or profit taxes, it does levy a real estate tax.Bermuda is home to immigrants from other countries. According to the 2000 census, 79% of the population is Bermuda-born and 21% is foreign-born. UK immigrants comprise 28% of the immigrant population; US, 20% (although the US Consulate estimates that the figure is closer to 40%); Canada, 15%; Caribbean, 12%; and Portugal/Azores, 10%. In February 1970, Bermuda converted from its former currency, the pound, to a decimal currency of dollars pegged to the US dollar.
The UK is formally responsible for Bermuda's foreign and defence policy. The Government of Bermuda has begun to pursue some international initiatives independent of the UK in recent years. Bermuda signed a cultural memorandum of understanding with Cuba in 2003. The island also joined the Caribbean Community (CARICOM) as an associate member in 2003.