Insurance derivatives trader. Pricing actuary. Risk modeling technician. Structured finance credit analyst. The arcane job descriptions for international business posts on the island fill most of the employment pages in the daily paper—a visible testament to the extent of the island’s economic juggernaut.
What brings so many foreign companies to the island? One of the most business-benign regulatory environments in the world, along with a tax-neutral environment and political stability, are the main attractions. “Exempt” or “permit” corporations—which differ from local companies in that they can be owned by non-Bermudians as long as their business is overseas—are not taxed on their income, and there are no taxes on interest, dividends, unearned income, or capital gains. The island also offers a professional workforce, a sophisticated commercial infrastructure, and cutting-edge telecommunications. While Bermuda has benefited hugely as a result, it has also managed to hone a reputation as a respected offshore financial center, untarnished by the rampant money-laundering, corruption, and dubious bank-secrecy laws that plague many other so-called tax havens. Yet, the sector is uncertain about how U.S. President Barack Obama’s administration may view its offshore status, and the tax implications of any crackdown on U.S. companies headquartered offshore.
The international business sector comprises a variety of enterprise: heavily capitalized reinsurance companies (firms insuring against underwritten loss); insurance captives (offshore subsidiaries offering insurance within the parent company or mainland group); financial services firms; mutual and hedge funds; trusts; investment managers; shipping corporations; and commercial traders. All the “top-four” accounting firms—PricewaterhouseCoopers, Deloitte & Touche, KPMG International, and Ernst & Young—have major offices in Hamilton. Banking, investment, and management services; advertising firms; printing houses; computer and data consultants; and many other Bermudian-owned businesses also support and benefit from the industry.
Indeed, the current welfare of all islanders depends heavily on international business, directly or indirectly. For, while the sector’s growth has caused its share of social pressures, foreign companies pay for the privilege of an offshore jurisdiction through government fees, by bringing business visitors to the island, providing jobs and revenue to local businesses, and fueling the need for nonstop construction. The trickle-down is felt even on the grassroots level: Companies help support island charities, including museums and art galleries; fund summer camps, conservation initiatives, and social projects; even pump cash into private-school budgets—though cynical Bermudians argue the last simply pays for expat children to skip past long admissions waiting lists. Though perennial problems such as the threat of work-permit caps, the threat of tax hikes, and the politically divisive ramifications of independence from Britain have the potential to undermine the international business sector by driving companies to competing jurisdictions like Dublin, Zurich, Guernsey, or Cayman, the immediate future of the industry appears strong.
© Rosemary Jones from Moon Bermuda, 2nd Edition