Bermuda extends tax exemption period


The Bermuda government has recently enacted the Exempted Undertakings Tax Protection Amendment Act 2011.  The amendments to the original 1966 Act extend the duration for which the minister of finance may grant an assurance to an exempted undertaking that in the event of certain taxes (such as income related tax, tax on the sale or appreciation of a capital asset, or any estate related tax) being introduced in Bermuda, they will not apply to these entities or their operations. The term 'exempted undertakings' includes exempted companies and partnerships, and overseas companies and partnerships.

Before the introduction of the act, the minister of finance could grant such an assurance up to 28 March 2016. This has now been extended to 31 March 2035.

As from 25 March 2011 an exempted undertaking wishing to apply, may submit an application to the minister of finance together with a fee of $165 in order to benefit from the extension of the tax assurance.  For exempted companies that already have an assurance until 28 March 2016, the existing assurance remains valid. However they can apply for an extension to the assurance lasting until 31 March 2035.

This is seen as a positive move from the government of Bermuda, and while an application is not obligatory, it is expected that most exempted undertakings will apply.