Top Sectors in Bermuda

Tourism in Bermuda

Tourism is a significant industry for Bermuda. Recent years have shown positive trends in visitor arrivals, indicating potential growth for the sector. Total arrivals have reached record highs, with leisure air arrivals performing well. Additionally, cruise arrivals have surged, suggesting a positive trajectory for Bermuda's tourism industry.

Banking and finance in Bermuda

Bermuda is renowned for its offshore financial services sector, particularly in insurance and reinsurance. The jurisdiction serves as a global hub for insurance and reinsurance companies, offering favorable regulatory frameworks and tax incentives.

Real Estate in Bermuda

The real estate sector in Bermuda plays a crucial role in the economy, driven by both domestic and international demand. The island's limited land availability and strict regulations contribute to property values, making real estate a lucrative investment opportunity.

Bermuda - Key Economic Indicators

Exports and Imports

Bermuda primarily relies on imports for goods due to its limited natural resources and land availability. In recent years, the value of imports has ranged from hundreds of millions to over a billion dollars annually. Meanwhile, exports are dominated by services, with key sectors like insurance and tourism contributing significantly to the economy.

Infrastructure

Bermuda boasts a relatively modern infrastructure, including well-maintained roads, bridges, and ports. However, due to its small size and geographic constraints, infrastructure development is focused on supporting tourism and international business. Investment in infrastructure typically ranges from 10 to 100 of millions of dollars annually.

Balance of Trade

Bermuda consistently runs a trade deficit, with imports exceeding exports. The trade deficit can range from tens to hundreds of millions of dollars annually. However, Bermuda's strong services sector, particularly in finance and tourism, helps offset this deficit by generating income from foreign sources.

Fiscal Policy

Bermuda's fiscal policy aims to maintain a balanced budget while supporting economic growth. Government spending typically ranges from hundreds of millions to over a billion dollars annually, covering areas such as healthcare, education, and infrastructure. Tax revenue, primarily from income and consumption taxes, also contributes to government finances.

Monetary Policy

Bermuda maintains a currency board arrangement, pegging the Bermudian dollar to the US dollar at a fixed exchange rate. The Bermuda Monetary Authority (BMA) oversees monetary policy and regulates banks and financial institutions. The BMA's interventions in the financial market aim to ensure the stability of the currency and financial system.

Trade Agreements

As a British Overseas Territory, Bermuda is not a party to trade agreements like NAFTA. However, it benefits from its strategic location and status as an international financial center, attracting investment and trade from around the world.

Environmental Regulations

Bermuda has implemented various environmental regulations to protect its ecosystem. These regulations cover waste management, conservation, and environmental impact assessments for development projects. Investment in environmental protection typically ranges from tens to hundreds of millions of dollars annually.

Tax System in Bermuda

Capital gains tax: Under Bermuda's tax framework, there exists no imposition of capital gains tax on profits arising from investments. This exemption underscores Bermuda's appeal to investors, as it offers a tax-efficient environment that encourages capital growth and investment. Consequently, investors can realize their gains without being subject to additional tax liabilities, enhancing the attractiveness of Bermuda as a destination for wealth management and investment activities. This tax policy aligns with Bermuda's broader economic strategy, which prioritizes facilitating investment, fostering entrepreneurship, and promoting economic growth.
Corporate tax rate: Bermuda maintains a zero percent corporate tax rate on most businesses, with the exception of certain designated sectors. In practice, this has led to a significant influx of international businesses establishing their presence in Bermuda.
Sales tax: Bermuda does not levy a sales tax on goods and services, contributing to its appeal as a tax-efficient jurisdiction. This absence of sales tax helps to keep consumer prices relatively low compared to other jurisdictions.
Property tax: Property tax in Bermuda typically ranges from 0.6% to 1.25% of the annual rental value, depending on the property type and location. For example, a property with an annual rental value of $50,000 could incur property taxes ranging from $300 to $625 annually.
Payroll tax: Payroll tax rates vary depending on the industry and the total remuneration paid by the employer. For example, in 2021, the standard payroll tax rate for most industries ranged from 4.75% to 14%. Employers are required to contribute a percentage of their employees' remuneration to the payroll tax, with rates ranging from 0% to 14%.
Tax compliance: Bermuda's tax collection system is generally efficient. The Bermuda Monetary Authority (BMA) oversees tax compliance for financial institutions, while the Bermuda Revenue Authority (BRA) is responsible for tax administration and enforcement. In 2021, the tax compliance rate was estimated to be over 90%.
Tax burden: Bermuda's total tax revenue amounted to approximately $1.3 billion in 2021. Customs duties and payroll taxes account for a significant portion of the total revenue. The tax burden on individuals and businesses varies depending on factors such as income level, property ownership, and industry sector.

Economy of Bermuda