Brief Country Overview
In facing up to the challenges of growing issues in the international offshore sector, tax haven Bermuda stepped up the pace a bit during 2008 and into 2009 in implementing important measures and rules. In June 2008, an Insurance Day Summit was held and the final rules and reporting framework for Basel II were published; in August of the same year both the Insurance Amendment Act and the Bermuda Solvency Capital requirement (BSCR) were introduced along with a series of solvency and disclosure rules for Bermuda Class 4 (re) insurers.
To demonstrate its full support and collaboration with global financial movements, tax haven Bermuda pledged its support to the Reinsurance Association of America Training Programme, contributed to the Global Reinsurance Market Report (GRMR) and published a profile of the Bermuda Captive Insurance Market.
In March 2009, a new banknote series was introduced in tax haven Bermuda and endorsed by the Minister of Finance, Honourable Paula Cox, in commemoration of the country’s 400th anniversary of settlement. As a precautionary measure in protecting Bermudian banks against the possible impact of the global economic downturn, tax haven Bermuda took upon itself to review the capital levels across the Bermuda’s banking sector ; a review that showed that banks in Bermuda exceed the capital requirements of the Bermuda Monetary Authority. However, in order to introduce a capital buffer, banks were required to undertake stress tests both as internal simulation exercises and as demanded by the BMA so that an agreement could be reached on the level of capital that each bank is supposed to have in order to be able to maintain high quality Tier 1 capital of at least 6% of risk-weighted assets according to the rules set by Basel and absorb the possible losses that could be caused by a serious economic crisis.
Bermuda Fiscal Advantages and Incentives
Tax haven Bermuda is internationally recognised as a premier offshore tax haven and international financial center with a business oriented and investor friendly environment. In addition to tax haven Bermuda’s strategic location to the United States, tax haven Bermuda offers many benefits to investors; including;
- Sophisticated infrastructure
- Steady supply of trained experts and professional
- Convenient time zone
- Friendly business environment
- No tax on income
- No tax on profits
- No withholding tax on dividends or interests
- No tax on capital gains
- No estate, gift, succession, transfer tax
Bermuda Offshore Legislative Framework
Bermuda is affiliated with a many other tax havens and organisations including the Isle of Man, Malta, Cayman Islands, South Africa, UK FSA, New York State Insurance Department and the International Organisation of Securities Commissions (IOSCO). Tax haven has pledged its continuous support in maintaining a regulated and transparent industry and thus became a member of the Offshore Group of Banking Supervisors (OGBS), International Association of Insurance Supervisors (IAIS) and the IOSCO. These organizations have been involved in cooperating with countries in order to promote and maintain high standards, integrity and efficiency in markets establish regulations for the surveillance of international transactions in the respective fields.
Bermuda Offshore Financial Services
International trusts, investment companies, insurances and other offshore vehicles are all governed by their respective acts and regulations. There are two types of companies formed in Bermuda; these include companies formed by local residents to carry out business within Bermuda and companies formed by nonresidents for the purpose of offshore activities. The Permit Company, which falls in between the two companies previously mentioned, is a version of what is commonly known as a foreign branch and is capable of carrying out both domestic and international trade. Offshore services available in tax haven Bermuda are as follows:
- Investment business company registration
- Investment funds
- Fund administration
- Establishment of trust companies
- Licensing and registration of offshore banks
- Licensing and registration of offshore insurance companies
- Incorporation and registration of International Business Companies
Bermuda Offshore Business Entities:
- Bermuda Exempted & Permit Overseas Partnerships
- Bermuda Non-Resident Trusts
- Bermuda Insurance
- Bermuda Segregated Accounts Companies
- Bermuda Exempted Company
Bermuda Monetary Authority (BMA)
Tax haven Bermuda’s BMA has been able to ensure that Bermuda lives up to the standards that it has set as an offshore services centre by taking the necessary supervisory measures which include routine prudential meetings and visits, conducting and designing a series of onsite programs for enhanced monitoring of the financial sector, elaborating and establishing risk assessment models, follow-ups and the identification of areas and companies that should be prioritised in terms of their exposure to risks so they can be classified according to their risk profile and the level and frequency of supervision that they should be given can be better determined. Much of Bermuda’s progress as a tax haven is owed to the BMA which not only regulates the financial services sector but is also responsible for the management of exchange controls transactions, issuance of the national currency, providing assistance in battling financial crimes and giving advice on financial and banking matters to the public and government. Structures such as trust companies, insurances, investment businesses are supervised with a risk-based financial regulations system which the BMI developed. This risk-based framework fosters the allocation of supervisory resources to the most important risk areas, fulfillment of duties, observation and adherence to international practices while meeting various demands.