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BERMUDA’S TAX CLIMATE
Bermuda does not tax income, profits,
dividends, or wealth. Accordingly, it does not have income
tax, corporation tax, capital gains tax, wealth tax, gift
tax, or inheritance tax. Moreover, it does not levy any
form of business tax, value added tax, sales tax,
accumulated profits tax, or withholding tax.
The favourable tax regime in Bermuda is
reinforced by a government guarantee of tax exemption, which
is available to most enterprises incorporating in Bermuda.
Under the Exempted Undertakings Tax Protection Act, 1966, an
exempted company or exempted partnership may apply for a
guarantee from the Bermuda government that, should the
government impose any tax on income, profits, or capital
gains, this tax would not be levied on the exempted company
until 28 March, 2016.
As Bermuda imposes none of the direct taxes
commonly found in other countries, it has no tax treaties
granting relief for taxes paid in other jurisdictions.
Bermuda does, however, have a tax convention with the United
States that permits US companies to hold meetings in
Bermuda, the costs of which may be deducted for US tax
purposes. The convention ensures that Bermuda is on a level
playing field with other countries that have tax treaties in
the area of federal excise taxes, and it provides for the
exchange of information, as long as various conditions are
met.
Bermuda has for many years been a premier
location for the establishment of international business
companies intended to engage in all manner of commerce,
conduct transactions, own, license, and receive the profits,
royalties and proceeds relating to property of all kinds.
In 1990 the Stamp Duties (International Business Relief) Act
was passed. This Act exempts any instrument executed on or
after 1st April, 1990 by any international business, or by
any person in respect of an interest which he has in, or in
property of, an international business from the payment of
stamp duty. The effect of Bermuda’s tax regime generally is
to allow companies to conduct their activities with complete
freedom from transactional or direct forms of tax.
For further information relating to taxation
of Bermuda companies please
contact James A. F. Watlington, Alexanders, Barristers &
Attorneys.
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