Bermuda
Tax Treatment of Offshore Operations
In Bermuda there is no income
or corporation tax, no capital gains tax, no
VAT or sales tax, and no withholding tax. Companies
and partnerships pay annual fees to the Government
depending on their nature and capitalisation.
There are also some employee-related taxes which
apply to all employers, payroll tax and social
and health insurance contributions. These payments
are described in Domestic
Corporate Taxes.
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Bermuda
Taxation of Foreign Employees of Offshore
Operations
This
section refers to the taxation of foreign employees
in Bermuda. The general principles of individual
taxation in Bermuda also apply to the resident
employees of non-resident entities. There is
in fact no distinction between the employees
of resident or non-resident operations. Most
types of compensation and benefit paid to employees
are subject to the payroll tax, which is the
only significant tax for individuals; there
are no special privileges or exemptions for
expatriate workers.
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Bermuda
Exchange Controls
Bermuda has exchange controls
which apply to residents in respect of the Bermudian
dollar. The forms of company listed above are
considered to be non-resident, and there are
no controls on their freedom to make transfers
and carry out transactions in all other currencies.
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Bermuda
Offshore Activities
Generally, the forms of company
and partnership described above which are those
used for offshore operations are allowed to
trade freely from Bermuda with external partners,
but must limit their dealings on the island
to other exempt entities, to dealing in securities,
(for mutual funds) to selling shares, and to
managing the affairs of other exempt or non-resident
entities. It is possible to obtain a license
from the Minister of Finance to carry out other
types of business activity on the island, if
he considers it is in the interests of Bermuda.
In view of the Government's support for e-commerce,
these licenses are readily issued for Internet
providers and infrastructure companies.
Exempt
entities are not allowed to buy freehold property
on the island, but may lease office accommodation
for their own use. An exempt entity can hold
a mortgage on a Bermudian property (usually
to assist an executive in purchashing accommodation)
but needs the consent of the Minister of Finance
if the amount is greater than BMD50,000.
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Bermuda
Employment and Residence
In
common with some other crowded and attractive
offshore jurisdictions, Bermuda limits immigration
through tough controls on work permits and housing.
The
Bermuda Immigration and Protection Act 1956
requires that a non-Bermudian, not being married
to a Bermudian, must obtain a work permit, and
this will only be granted if there is no suitably
qualified Bermudian. Positions must first be
advertised locally before a permit is applied
for, although this requirement is often waived
for senior positions. Work permits are normally
granted for one year (longer in the case of
senior posts). Permits are not normally given
to people with more than two children. Effective
1st April 2010, work permits costs range from
USD700 for a one-year permit to USD5,000 for
a five-year permit. The soon-to-be-introduced
ten-year permit will cost USD20,000. The ten-year
permit was announced during a speech to the
Bermuda Chamber of Commerce by Minister for
Economy, Trade and Industry, Kim Wilson in late
April, 2011 and is expected to be available
in a few months.
Foreigners
are more or less unable to buy land or property,
other than houses with a high Annual Rental
Value (ARV). The Bermuda Immigration and Protection
(Minimum Annual Rental Values) Regulations 2007
set the minimum ARV at USD153,000. Foreigners
may also hold or acquire designated condominium
units with an ARV of USD32,400.
In
2007, new legislation attempted to tighten up
and clarify restrictions on the ownership of
land and property by 'restricted persons,' in
other words non-permanent residents of Bermuda
and exempted corporations.
Rentals
and leases of property from Bermudians have
been possible, with permission from the Minister
of Labour and Home Affairs, normally given only
if the owner is leaving the island (with the
idea of preventing speculative property development).
Exempt companies have been able to finance and
lease newly-constructed houses subject to certain
conditions.
Purchase
of properties by non-Bermudians requires a license
from the Minister, and payment of a fee of 25%
(at the time of writing) of the value of the
property.
In
June 2007, the Bermuda Immigration and Protection
Amendment Act 2007 and seven related Regulations
come into force. The commencement of this Act
and the Regulations represents the first complete
overhaul and modernization of Part VI of the
Bermuda Immigration and Protection Act 1956
since the Act came into effect.
It
marks the culmination of the legislative process
through which this Part was amended to bring
into law what was the Government’s land
policy and, in particular, to address the problem
of “fronting”, by which means non-Bermudians
have gained control over land in Bermuda either
while avoiding the licensing regime or in defiance
of the Government’s land-holding policy.
Additionally, the Regulations ensconce in law
certain administrative rules supporting Part
VI of the 1956 Act.
NB:
This is a very abbreviated summary of the complex
rules governing property purchase or rental
in Bermuda.
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