Bermuda Tax: Bermuda signs tax exchange agreement with Canada
Bermuda signed a tax information exchange agreement with Canada this week and completed negotiations for a similar deal with Indonesia.
The Canadian TIEA was concluded at a ceremony on Monday at the Premier's official residence at Camden.
It was signed by Finance Minister Paula Cox and Canadian Consul General Daniel Sullivan.
The TIEA means Canada will extend an important benefit to Bermuda that previously was only conferred to countries with which Canada has a double tax treaty in force.
Dividends of foreign affiliates resident in Bermuda that are paid to their Canadian parent companies out of the active business income earned on the island will be exempt from Canadian taxation.
This will be particularly useful to Bermuda's captive insurance industry. Minister Cox said: "Canadian companies are hugely involved in the captive, hedge fund and private equity areas of the inter- national business sector and more recently in the banking arena.
"Currently, there are 1,145 entities with Canadian interest and this is expected to grow exponentially. At the annual Canadian Captive Conference in Toronto last week, the signing was noted by many as a significant step forward both in enhancing business ties and investment opportunities between Bermuda and Canada."
Bermuda's TIEA with Indonesia is expected to be signed later this year. It will provide for a full exchange of information on criminal and civil tax matters.
Minister Cox said:
"Indonesia has the remarkable distinction of having outperformed its regional neighbours and joined China and India as the only G20 members posting growth during the recent financial crisis.
"This agreement is a significant step forward, both in enhancing business ties and investment opportunities between Bermuda and Indonesia, but it will also facilitate Bermuda expanding our offerings in the realm of Islamic structured finance, including both conventional and Shari'iah investment funds.
"It is likely that the global market for Islamic insurance, or Takaful, will continue to grow, opening exciting possibilities for Bermuda reinsurers."
Bermuda now has 22 signed agreements with provisions for the exchange of information for tax purposes, including deals with the U.K. and the U.S.