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The term 'offshore' is not used in Bermudian legislation
or in describing company forms. Non-residence
is the key criterion for obtaining exemption from
the statutory requirement for 60% local ownership.
Since there are no corporate taxes other than
employee-related taxes, which apply to all companies,
there is no separate 'offshore' sector as such.
Forms of Offshore
Operation
Offshore operations may take
place within the following forms:
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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Taxation of Foreign Employees
of Offshore Operations
This
section refers to the taxation of foreign employees
in Bermuda. See Domestic
Personal Taxes for the general principles
of individual taxation in Bermuda, which 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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Exchange Control
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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Offshore Activities in Bermuda
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 $50,000.
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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. Work
permits cost approximately $500 per year.
Foreigners
are more or less unable to buy land or property,
other than houses with an Annual Rental Value
(ARV) in excess of $43,800 (at the time of writing).
Rentals and leases of property from Bermudians
are possible, with permission from the Minister
of Labour and Home Affairs, but it is normally
given only if the owner is leaving the island
(the idea is to prevent speculative property development).
Exempt companies may finance and lease newly-constructed
houses subject to certain conditions. In fact
there are a number of condominium developments
in which accommodation is available to foreigners,
with a lower ARV limit than for other houses.
Purchase
of properties by non-Bermudians requires a license
from the Minister, and payment of a fee of 22%
of the value of the property.
NB:
This is a very abbreviated summary of the complex
rules governing property purchase or rental in
Bermuda.
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