Bermuda as a Tax Haven and International Financial Center

The islands of Bermuda have for decades been used as an offshore financial center by international companies (and individuals) originating from the United States of America thanks to the island’s close geographical proximity to North America. The islands are strategically situated in the North Atlantic some 1,000 miles (1,615km) northeast of Nassau in the Bahamas and 750 miles (1,250 km) southeast of New York. More recently, however, an increasing number of European and South East Asian entities have established companies in Bermuda, primarily to take advantage of its infrastructure and continuing political stability.

Isolated Archipelago

Bermuda is an isolated archipelago of 21 main islands and 160 islets located in the western Atlantic about 750 miles southeast of New York City and 3,445 miles from London. The Bermudas have a long history as a tax haven, and practitioners often refer to it as the “Cadillac” of the havens because it caters mainly to the rich and carriage trade.

Bermuda has the oldest parliamentary assembly in the western hemisphere (369) and the third oldest (behind Britain and the Isle of Man) in the world. Links with Royal England have been constitutionally preserved, and Bermuda today is the oldest self-governing British Crown Colony. With over 8,000 international exempted companies in her register, and the largest captive insurance market in the world, Bermuda is a celebrated tax haven. There is no form of corporate or personal income tax in Bermuda.

Bermuda is a British Crown Colony tax haven much like the Cayman Islands, the Turks & Caicos Islands, the Bahamas (now an independent member of the British Commonwealth) and Anguilla. Aside from being first-class tropical island tourist centers, what these five tax havens have most in common is that none of them impose taxes of any kind on companies and trusts organized under their laws.

Over the last few years Bermuda’s financial service industry has pushed the Government to reexamine ways to attract new offshore business. Amendments to Bermuda’s Companies Act have now been put into effect to ease the administration of mutual funds and investment companies – one of Bermuda’s largest industries.

The new changes permit:

Prospectuses for funds listed on an “appointed stock exchange” (like the NYSE or the Hong Kong exchange) no longer need to satisfy additional Bermudans requirements as to the contents.

Companies listed on an appointed stock exchange are no longer required to have a quorum of Bermudans resident directors.

Bermuda companies can pay dividends out of capital, not just out of profits.

Companies can now be formed with just one member and the directors are no longer required to own qualifying shares.

The holding of meetings be telephone and the passing of written resolutions has been adopted.

Provisions have been made to allow migration of companies to and from Bermuda.

The use of limited partnerships in collective investment schemes has been facilitated.

In addition, Barclays Bank of Bermuda has recently sold its controlling interest in Bermuda’s third largest bank – the Bermuda Commercial Bank. This has made banking in Bermuda more competitive, as the Bermuda government has granted banking licenses to only three banks.

Recently, Coutts & Co., Schroders, Toyal Trust and Lombard Odier have organized trust companies in Bermuda.

As a result of these changes, there has been a 52% increase in the number of collective investment schemes formed in Bermuda in 1992, and during the first six months of 1993 the rate of mutual fund companies formed in Bermuda has jumped to two a week.

Business Infrastructure

Much of Bermuda’s success as an international financial and business center has been due to the high quality of its professional support services. Today, there are some 190 lawyers, 500 accountants and 50 chartered financial analysts on the Island. The world’s major accounting firms are, in one form or another, represented in Bermuda.

Bermuda’s legal system is based on English common law, the doctrines of equity, and Acts passed by the Bermuda Legislature. The resulting system is uncomplicated and free of the cumbersome restrictions imposed by excessive restraints – legal, supervisory and regulatory sometimes found in other countries.

Equally important is the fact that Bermuda has a virtual absence of income taxes, withholding taxes, capital gains, taxes, capital transfer taxes, estate duties or inheritance taxes. Moreover, a Bermuda exempted company can, under current policy, apply to the Bermuda Government for an exemption from paying any taxes until 2016 should taxes be imposed on corporate earnings after the company is incorporated. No stamp duty is payable in respect of any instrument relating to an interest in an exempted company or on any transaction on the Bermuda Stock Exchange.

Banking Services

Although there is no “offshore banking” as such in Bermuda, some 90 international banks use the island, primarily through equity interests in Bermuda exempted companies, to carry on a wide range of financial activities, such as leasing, real estate ventures, group financing, collective investment schemes and the like. Any entity wishing to carry on “banking business” as defined by the Banks Act 1969 is required to obtain a license.

Presently there are three license banks in Bermuda, each listed on the Bermuda Stock Exchange: The Bank of Bermuda Limited, The Bank of N.T. Butterfield & Son Limited, and the Bermuda Commercial Bank Limited. The former two, and larger banks, have each been in existence for over 100 years. As at 31 December 1994, the consolidated assets of the three banks were some $12.4 billion, while the assets under their administration were valued at several times that amount. Bermuda Monetary Authority through its application of the Basle Standards. Banks in Bermuda have voluntarily agreed with the Bermuda Monetary Authority to maintain capital adequacy risk ratios calculated on their world consolidated operations at 10%.

This ratio is comfortably in excess of the internationally recommended minimum standard of 8%.

The three banks have, collectively, branch, subsidiaries and representative offices around the world including the Bahamas, the British Virgin Islands, the Cayman Islands, the Cook Islands, Guernsey, Hong Kong, Ireland, the Isle of Man, Jersey, London, Luxembourg, Mauritius, New York, New Zealand, Singapore and Western Samoa. As a consequence, Bermuda’s banks have a global perspective which is enhanced by excellent telecommunications and computer systems, large networks of correspondent relationships and sophisticated money transfer systems, large networks of correspondent relationships and sophisticated money transfer systems. These attributes enable the Bermuda banks to compete successfully with the larger money center banks worldwide for their services.

Bank and Insurance Companies in Bermuda

There are only three banks authorized to do business in Bermuda, and if you want to form a private bank in Bermuda, don’t bother. The Government will not issue you a license. As of 1987, Bermuda’s three banks (Bank of Bermuda, Bank of NT Butterfield, and Bermuda Commercial Bank) held $7 billion in Bermuda dollars and $5.1 billion on deposit with foreign banks against foreign currency deposits.

There are about 1,400 insurance and reinsurance companies registered in Bermuda with assets in excess of US$30 billion, and capital and surplus in excess of US$12 billion. Annual premium volume is more than US$10 billion. In 1985, ACE Insurance established a presence in Bermuda with an initial capitalization of $250 million, but within 12 months had $1 billion in capital.

Bermuda also has a very large oil trading business, and the shipping registry is growing fast. There are about 166 mutual funds in Bermuda.

The local governments of most all the British Commonwealth tax havens, including Bermuda, the Cayman Islands, the Bahamas, the British Virgin Islands and Anguilla, have enacted special laws to provide foreign investors (i.e., foreign depositors) confidentiality in regards to their offshore financial affairs. It is particularly interesting to note that in all these tax havens the good blessings and seal of approval for these secrecy legislations are provided by “The Queens Most Excellent Majesty” – Queen Elizabeth II of England.

Needless to say, there is nothing in the United States doctrine that offers investors any such protection.

In Bermuda all the legislation (including The Banks Act, 1969, The Trust Companies Act 1991 and the Bermuda Stock Exchange Company Act 1992) come with the following preamble:

Be it enacted by the Queen’s Most Excellent Majesty, by and with the advice and consent of the Senate and the house of Assembly of Bermuda, and by the authority of the same as follows:

The Bermuda Monetary Authority Act 1969, No. 57

1994 Unofficial Consolidation

Secrecy

31. (1) Except in so far as may be necessary for the due performance of his functions under the Act or other statutory provision, [and subject to subsections (1a), (1B) and (1C) any person who is a director of the Board or who is acting as an officer, a servant, an agent or an advisor of the Authority shall preserve and aid in preserving secrecy with regard to all matters relating to the affairs of the Government or the Authority of any person that may come to his knowledge in the course of his duties; and any director, officer, servant, agent or advisor who communicates any such matter to any person other than the Minister, Board or an officer of the Authority authorized in that behalf by the Chairman or suffers or permits any unauthorized person to have access to any books, papers or other records relating to the Government or the Authority, or to any person, shall be guilty of an offense and shall be liable on summary conviction to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding six months or to both such fine and imprisonment and on conviction on indictment to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding two years or to both such fine and imprisonment.]

(1A) Subsection (1) does not preclude the disclosure of information –

(a) for the purpose of enabling or assisting the Minister to exercise any functions conferred on him by this Act or the Regulations made there under or in connection with the dealings between the Minister and the Authority when the Authority exercises its functions under section 21(1)(a);

(b) for the purpose of enabling or assisting the Board or the Authority to exercise any functions conferred on them by this Act or the Regulations made there under;

(c) if the information is or has been available to the public from other sources;

(d) in a summary or collection of information framed in such a way as not to enable the identity of any individual depositor, client or other customer of a financial institution or of any financial institution to which the information relates to be ascertained.

(1B) Subsection (1) does not preclude the disclosure of information for the purpose of enabling or assisting an authority in a country or territory outside Bermuda to exercise functions corresponding to those functions of supervision, regulation or inspection of the Authority.

(1C) Notwithstanding any provision in this Act, no information or document regarding the account or regarding any matter or thing relating to the business or other affairs of any individual depositor, client or other customer of a financial institution which has been obtained by the Authority in the exercise of its functions relating to the supervision, regulation or inspection of a financial institution shall be disclosed.

(2) [No director, officer, servant, agent or advisor of the Authority shall be] required to produce in any court any book or document or to divulge or communicate to any court any matter or thing coming under his notice in the performance of his duties under this Act or other statutory provision, except on the direction of the court or in so far as may be necessary for the purpose of carrying into effect the provisions of this Act or other statutory provision.

(3) Notwithstanding anything to the contrary in this section it shall be lawful for the Minister, where he is of the opinion that it is desirable so to do in the interest of internal security or for the detection of crime, to authorize any police officer of or above the rank of Inspector by warrant under his hand to inspect and take copies of any of the books or records of the Authority.

(4) The books of the Authority shall be deemed to be banker’s books for the purposes of the Evidence Act 1905.

Banking and Exchange Controls

Under the Banks Act of 1969 no person, firm or body corporate can carry on the business of banking, or own a bank in Bermuda, unless it has been specially authorized by an act of the Legislature and obtains a license from the Minister of Finance. The government is not encouraging further application in the banking field.

Because of the strict regulations against the formation of new banks, only three now carry on regular banking business in Bermuda. The Bank of Bermuda Limited was established in 1889. The Bank of Butterfield, Ltd., which is the oldest bank in Bermuda, was established 30 years earlier in 1859. The Bermuda Provident Bank commenced business in 1969.

Exchange controls exist to protect the Bermuda dollar, but exempt companies can operate in any currency other than the Bermuda dollar.

Bermuda has no bank secrecy laws like the Bahamas or the Cayman Islands. It is virtually impossible for unauthorized persons of foreign governments to obtain information about Bermuda companies. The new tax treaty with the U.S. caused a ripple of concern among Bermuda’s business community as the treaty allows for an exchange of certain information between Bermuda and U.S. authorities.

The Bermuda Stock Exchange

The Bermuda Stock Exchange is another plus for Bermuda. By the terms of the Bermuda Stock Exchange Company Act 1992 the Exchange is a self-regulatory body under the supervision of the Bermuda Monetary Authority. The Stock Exchange Act came into being as a result of Bermuda recognizing the need to transform the then existing informal local Exchange into a properly regulated modern, electronic exchange, on which international companies can be listed. To date the Exchange has attracted listings of some 35 international mutual funds and 12 international companies.

It is evident that as the Stock Exchange builds its infrastructure and standards, listings of an international nature will increase. Moreover, it is anticipated that the Exchange’s tax-free dealing service will enhance Bermuda’s attractiveness as an efficient, modern financial and business center. In turn, this will provide additional incentives for international companies to move to the Island and seek a listing on the Exchange. In this connection it is worth noting that Bermuda has already become the preferred jurisdiction for companies re-locating from Hong Kong and, as at 30 September 1994, 243 of the 511 companies listed on the Hong Kong stock Exchange were incorporated in Bermuda.

Trust Business

Trust business continues to be an area of financial growth for Bermuda. With the passing of the Trust Companies Act in 1991, the Bermuda Government lifted the moratorium on the limit of companies providing trust services. Today there are 28 trust companies, which have been licensed to carry on general trust business, including a number of notable international names. This represents a very significant shift in business opportunities for Bermuda and has broadened the range of the Island’s international financial services. In this connection, there are a number of international names evident (for example, Coutts & Co., Barclays, Lombard Odier, Royal Trust of Canada and Schroders) which have a physical presence in Bermuda for trust business.

Bermuda trusts are governed by the island’s 1975 Act, with a perpetuity period of 100 years. Bermuda trusts draw their inspiration from English Common Law and precedent.

As a common-law jurisdiction, Bermuda is very suitable for the establishment of trusts. A resident of any country can form a Bermuda trust. The settlor (grantor) does not have to be resident or physically present in Bermuda, and the trust funds do not have to be remitted to Bermuda, but they must be under the trustee’s control. Trust corpus may consist of cash, land, securities, but not Bermuda currency or shares in a Bermuda local company.

Normally, no bank references or other identification needs to be supplied to authorities to form a Bermuda trust. The Trustee Act of 1975 sets out the general provisions relating to the powers and duties of trustees.

The Common Law Rule Against Perpetuities applies to a Bermuda trust, so the maximum duration of a trust is limited to the lives of the beneficiaries plus twenty-one years. Beneficiaries may include corporations, trustees, individuals, or other settlements.

A new Stamp Amendment Act of 1985 allows a trust to be moved into Bermuda at a cost of $250 regardless of the value of property transferred. If the trust was formed outside Bermuda less than two years before being moved it will be subject to a stamp tax of 1/10th of 1% of the value of the non-Bermudans property.

For North Americans, Bermuda is probably the best bet, but many UK residents prefer Bermuda because it is further from the reach of both the Inland Revenue and influence of the UK government.

Bermuda’s bank vaults are stuffed with several thousand family trust deeds but wealthy investors would probably do better to appoint trustees from one of the island’s top law firms.

Banks the world over love bank charges and their fees are based on fixed percentages of monies handled which works out to be a lot more than the administrative charges of an equally efficient legal trustee.

International Trust Company Bermuda, the local Barclay’s offshoot, charges an annual administration fee of 0.25% on the first $1M in trust, 0.025% investment fee on all transactions a withdrawal fee, and an income fee of 3% of the net income “where significant income is generated.

By contrast, Appleby, Spurling & Kempe, one of the island’s top three law firms, would charge about $1,200 for setting up a trust and a minimum of $750 a year as an administration fee, subject to the time spent. The fee for large settlements involving greater responsibilities would be subject to negotiation.

Appleby has its own trust company, Harrington, running some 400 trusts – an administrative convenience ensuring that the settlor and beneficiaries are not inconvenienced by the death or absence on holiday of a trustee as other partners of the firm can take up the reins.

Exempted Companies

The primary attraction of Bermuda for international business purposes is the exempted company. An exempted company is one, which is exempted from various provisions of Bermuda law applying to local companies, which, among other things restrict the portion of share capital, which may be held by non-Bermudans. Thus, exempted companies are predominantly owned by non-Bermudans. Although incorporated in Bermuda, exempted companies may generally carry on business only in connection with transactions and activities external to Bermuda. As at 31 December, 1994, there were more than 8,000 exempted companies registered in Bermuda carrying out a full range of activities, including insurance, investment management, foreign sales corporations, private and corporate investment holding, shipping, oil trading and oil exploration, group financing etc.

Under the Companies Act of 1981, three types of companies can be formed in Bermuda. A local company can do business within Bermuda and abroad, but must be 60% Bermuda owned. Exempted companies are popular with foreign investors, as they are not required to have 60% Bermudans ownership. Overseas companies are companies incorporated in another country and permitted to trade from a place of business in Bermuda.

Upon application to the Minister of Finance, an exempted company can receive statutory assurance against any legislation imposing tax on profits or income or a tax on capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax until the year 2016. Exempted companies are also free from exchange controls.

The Government is snobbish about who they permit to incorporate in Bermuda. Good bank references are essential. An advisory committee appointed by the Minister of Finance carefully screens applicants and passes on all applications. Incorporation usually takes longer in Bermuda then in other tax havens. Notwithstanding these drawbacks, Bermuda is a first-rate no-tax haven.

Tax Guarantees

Bermuda has no income or profits tax that applies to individuals or corporations. There are no capital gains taxes, no withholding taxes, no tax on accumulated earnings, no sales tax, no value added tax, no business tax, and no gift tax, estate or inheritance taxes. Bermuda has a small probate tax that covers real and personal property located in Bermuda. The rate is 2% on the first $100,000. Under the Exemption Undertakings Tax Protection Act of 1966, an exempt company formed by non-Bermudans can receive a written guarantee from the government providing a tax exemption from income taxes being imposed to the year 2006.

Employment Tax and Hospital Levy

Some people say Bermuda is no longer a true no-tax haven because of the new Employment tax and Hospital Levy. However, the employment tax does not apply to exempted companies. Companies not exempted (i.e., local companies) are required to pay an employment tax if their total payroll exceeds BD$36,000 per financial year. The tax is calculated at 5% (2% for hotel and restaurant employees) of the total payroll with a deduction of BD$3,000 quarterly if the annual payroll is over BD$100,000.

The Hospital levy is charged on the total payroll of a company at 4% per year. An employee may withhold 1½% of an employee’s salary to meet the hospital levy liability. Hospital levy is payable by exempt companies. Each employee of an exempt company is assumed to receive a salary of BD$32,985 (basic rate a year), which means the minimum hospital levy is BD$1,319.40. The basic rate is adjusted each year. The hospital tax does not apply to directors and officers of an exempt company unless they regularly perform managerial functions on a day-to-day basis.

Types of Companies

Basically, three types of companies can be formed in Bermuda – local, exempt and overseas. If you plan to carry on business within Bermuda, it is required that at least 60% of the shareholders be Bermudans. Offshore investors usually form an exempted company, which is exempt from the 60% ownership requirement of “local” companies. Exempt companies make up the largest group of companies in Bermuda.

An exempted company is prohibited from doing business within Bermuda except for the furtherance of its offshore business. An exempt company can operate from an office or permanent establishment in Bermuda, but cannot trade with persons who are residents or companies resident in Bermuda, with one exception made for reinsurance companies. Exempt companies are further categorized as “non-resident”, in which case the companies are incorporated in another country but managed from Bermuda.

Exempt companies are prohibited from holding land in Bermuda, other than land leased for business purposes. Today, here are well over 5,000 exempted companies registered under the Companies Act of 1981 or by a private act of the Bermuda legislature.

Capitalization Costs & Other Fees.

A minimum capitalization of $12,000 BD (about US$12,000) is required for every exempt company. If the company writes insurance, the minimum capitalization is BD$120,000, and the shares must be fully paid. A stamp duty of ¼ of 1% of the authorized share capital is payable upon filing the Memorandum of Association. Lawyers’ fees of about BD $2,000 to BD$6,000 (the higher figure is for insurance companies and open-ended mutual funds) should be expected. Other fees include:

The sum of BD$1,200 payable on incorporation and annually thereafter by exempted companies. This is increased to BD$2,250 in the case of insurance companies, mutual funds, and finance companies must also pay an annual business fee of BD$1,550.

Application fee of BD$125 payable on submission of the application for consent to register the company.

Stamp duty of ¼ of 1% on the value of any document creating a mortgage or similar type of security charging the assets of the company.

A share transfer duty computed as ½ of 1% of the consideration on personal property, including shares of Bermuda companies or on other shares if the transfer is effected in Bermuda.

1/10 of 1% of the premium for mutual funds or open-ended companies.

Stamp duty on deceased estates in Bermuda is 2% of the first BD$90,000 and 5% of the remainder payable on application for Bermuda probate. Shares in exempt companies owned by non-residents are not subject to this stamp duty unless the deceased was ordinarily resident in Bermuda at the time of his death. For purposes of computing the estate tax, the value of an estate is reduced by the value of legacies to a spouse.

Local Companies Tax

Every local company must pay an annual tax based upon issued capital as follows:

Issued Capital BD$ BD$

Less than 50,000 500

50,000 or more but less than 250,000 750

250,000 or more but less than 500,000 1,250

500,000 or more but less than 1,000,000 2,500

1,000,000 or more but less than 10,000,000 5,000

Company Registration

Registration under the new Companies Act of 1991 commences with an advertisement in the Official Government “Gazette” setting out the proposed name, its principle objectives, and the fact that it is an exempt company. After making application to the Minister of Finance, the minister will check your bank references, unless you are well known in the financial community. It can take as long as three months from the time you run your announcement in the government’s Official Gazette before the company can commence business. The Minister of Finance has the final say-so, and can grant or refuse a permit without giving any reason for his decision.

Shares, Shareholders and Meetings

All shares must have a stated par value. Bearer shares are not permitted. The minimum number of shareholders needed to form a company is three. A company may issue stock with different privileges, and with or without voting rights or dividend preference. A company may raise capital by issuing bonds ore debentures unless forbidden by its “by-laws”. With the approval of the shareholders the Memorandum can be amended to increase or decrease the authorized capital. There must be at least one directors’ meeting every year.

Insurance Business

One of Bermuda’s greatest financial strengths is its insurance industry. As at 31 December 1994, Bermuda’s captive insurance and reinsurance markets comprised 1,343 companies. Today, Bermuda is the chosen home for more than half the world’s captive insurers and has rapidly become a favorite location for catastrophe insurers. Bermuda’s companies have total assets of almost US$70 billion, capital and surplus of almost US$29 billion and net premiums written in excess of US$13 billion. These figures include the significant growth that Bermuda experienced in 1993 with companies writing property catastrophe risks injecting over $4 billion dollars in capital and surplus into the Bermuda insurance market.

Investment Management

Over recent years, Bermuda has also become a leader in the offshore mutual funds industry. As at 31 October 1994, there were some 557 collective investment schemes operating out of Bermuda (made up of 476 mutual funds and 64 unit trusts and 1 feeder trust, as well as 20 limited partnerships) with an aggregated net asset value of over US$12.3 billion. The granting of Designated Territory Status in 1988 under the United Kingdom Financial Services Act 1986 has also given international recognition of the quality of the Bermuda supervisory and regulatory process. In order to provide support to this growing volume of investment management business, a significant number of ancillary custody, valuation, registrar and transfer agency services – have been established in Bermuda.

Shipping

Bermuda’s shipping registry dates back to the early 1700’s. As at 31 December, 1994, the register contained 93 commercial ships totaling 3,077,097 gross tons and 361 yachts totaling 42,605 gross tons. As part of the British registry, Bermuda registered ships fly the red ensign under faced and are therefore entitled to the protection of the British Royal Navy. In this regard, Bermuda enjoys “Equivalent Exemption Status” under the U.S.A. Internal Revenue 1986 Code and, as a consequence, its registered vessels and shipping companies may apply to the Internal Revenue Service for exemption form the 4% freight tax levied on certain U.S. related income of foreign shipping corporations.

Aircraft Registration and Leasing

Bermuda’s Aircraft register has existed since 1931. It operates substantially as an adjunct to the range of service provided by Bermuda to international company business. As at 1 March 1995, there were some 109 aircraft on the register and 100 operators. Most of the aircraft are either privately owned or corporate jet aircraft used for the transport of their beneficial owners or company executives. More recently, a number of commercial aircraft have been added to the Register through the use of leasing structures. These factors demonstrate that Bermuda registration enjoys global acceptance and respect. Operations on the Register are therefore conducted with appropriate regulatory safeguards to ensure that this position continues.

People, Language, Religion, Political Stability

About 40% of the population of 65,000 is white and the rest is black. English is the official language. Christianity is the main religion. Kite flying is an island sport.

Bermuda is a British self-governing Crown colony. Representative government was introduced into the islands in 1620. Since 1684 the Governors have been appointed by the Crown. Queen Elizabeth maintains a palatial summer home here and is said to visit regularly. Hamilton is the capital city.

The government is biracial, but the white minority has always retained control over the economy of the islands. Bermuda could have gone the way of other Commonwealth colonies (like the Bahamas) and sought independence from Britain, but Bermuda chose to remain a crown colony. Unlike the Bahamas, where the black majority has gained political control, the black majority in Bermuda is still struggling. There has been political unrest in the past.

In 1973 Governor Sir Richard Sharpes and his aid were murdered by assassins. Six months before, the country’s police chief was killed. The subsequent trial for murder and hanging of two black men touched off riots in December 1977, causing millions of dollars in damage. British troops were sent in to keep order. Fortunately, these occasional disturbances have had little impact on the offshore companies operating here. Bermuda boasts complete racial integration.

Income Tax Treaties

Bermuda has signed an exchange-of-information agreement (treaty) with the United States, which grants Bermuda complete exemption from U.S. excise tax on insurance and reinsurance premiums through December 31, 1989. The tax treaty took effect on December 2, 1988. Bermuda has no other tax treaties with other nations, including the United Kingdom.

America’s major publishers only occasionally speak out intelligently about tax havens – their function and place in today’s world of business and finance. In America the reporting is limited to headlines warning of offshore fiascoes and other rip-offs. Someday, perhaps, the New York Times and the Wall Street Journal will outgrow their minds. Until then, tax havens will stay publishing taboo on this side of the Atlantic.

Conclusion

All the above factors have contributed to Bermuda’s status as a leading international financial and business center. When combined with Bermuda’s reputation as a first-class resort destination, they result in an offshore environment, which is unequaled anywhere in the world.