Money Matters

Pop quiz! What do Hong Kong, Luxembourg, Belgium, Delaware and Bermuda all have in common? (No, it’s not a proliferation of quality truck stops but nice try). Along with Ireland, London, Switzerland and the Cayman Islands they’re the world’s best tax havens according to a recent article in Forbes Magazine. Says the report, two benchmarks were used to determine the top ten destinations: The capability to move money in serious quantities and a measure of each locale’s opacity (or how secret it is, meaning if regulation is intentionally created for the primary benefit of those who live there, then it’s probably a good place to hide cash). Of course not all of that money is illicit. But, says writer Richard Murphy, “if you’re going to hide illicit cash, where better to do it? Where it stands out from the crowd, or where it can be lost like a needle in the proverbial haystack? Big numbers help the owner of dubious cash lose theirs in the crowd, and the places named above are big.” No secret there. Companies have long set up shop in Bermuda for the tax breaks alone. It’s the reason why the island is so, shall we say, well taken care of. Big firms get tax breaks and ultimately a lot of that money gets reinvested back into the community. Says Murphy about Bermuda: It’s “the favorite location for U.S. corporate inversions, or companies that move their headquarters to a tax haven while retaining their material operations in higher-tax America, and any offshore insurance company.” Yep, it’s all true. But does your tax haven have pink sand beaches? Take that Delaware.

Money Matters

This just in: According to the New York Times, former U.S. representative and Merrill Lynch executive Harold Ford Jr. will not challenge New York Senator Kirsten Gillibrand for the democratic U.S. senate nomination. So what does this have to do with Bermuda? The charismatic businessman is expected to be the keynote speaker at this year’s general meeting of the Bermuda International Business Association (BIBA), an organization of island-based companies that provides services and products to offshore clients. As noted in the BIBA press release, he’ll speak on “the challenges and opportunities that face America and how Bermuda can play a vital role in the U.S. and global economy.” Currently Bermuda’s vital role in the U.S. and global economy is centered around its tax structure or lack thereof—the reason why thousands of international corporations, most of them American, are domiciled here. Bermuda is no tax haven—after all, it’s not Macau or the Cayman Islands for that matter—but White House estimates suggest nearly one-third of foreign profits reported by U.S. corporations in 2003 came from Bermuda and two other low-tax countries (the Netherlands and Ireland). For big businesses it’s more like tax avoidance than tax evasion, even still, it makes Ford’s speaking engagement a particularly odd choice since the former congressman voted to end offshore tax havens in 2004. Just saying. The good news is tickets are still available to Ford’s BIBA powwow Thursday afternoon at the Fairmont Hamilton Princess. As for me, well, I think I'll keep the $100 entrance fee in the bank.

Money Matters

It’s no secret that Bermuda is one of the wealthiest countries on the planet. Not only does the mid-Atlantic archipelago boast the highest GDP per capita in the world—an astonishing $91,477 per person, about $4,000 more than oil-crazed Qatar in the Middle East—but it’s also home to some of world’s richest people, including New York City Mayor Michael Bloomberg, former presidential candidate Ross Perot and on-again off-again Italian Prime Minister Silvio Berlusconi. Here’s one more for the mix: Roman Abramovich, a Russian billionaire who currently owns the world’s largest private vessel—a 560-foot $485 million super yacht that’s registered in Bermuda (see above; thanks for the pic GizMag). According to a recent Bloomberg report, the tycoon outfitted his ship with $326,000 worth of contemporary art, a relative drop in the bucket considering he shelled out a whopping $86.3 million for Francis Bacon’s Triptych in 2008. In addition to two helicopter pads, a disco hall and a submarine capable of submerging 50 meters, the ship boasts a German-built missile defense system and bulletproof glass in Abramovich’s master suite. Paranoid much? It’s one heckuva boat, although I still haven’t seen it on Bermuda’s shores. My guess is he’s laying low to avoid major embarrassment in the yachting community: CNN Money reported today that a Belgium-based design firm has plans to build an even bigger private vessel, a 656-foot super yacht that would reportedly cost up to $900 million with amenities such as a 100-foot swimming pool, two 98-foot day boats and a drive-in garage. Sorry Roman, I guess you’ll have to settle for number two.

Money Matters

Calling all executives: Want a great place to do business? According to the folks at SwiftJet—a private jet charter company based in Toronto—Bermuda is one of the most popular destinations for executives flying by private plane. Why is that you might ask? "When executives charter private jets they want to maximize their best assets, employees and time," says Bassam Al-Sarraj, president of SwiftJet. "Being able to travel on your own schedule down to the minute is essential and that's the flexibility of private jet charter."
Gotcha. But why Bermuda? Unfortunately Mr. Al-Sarraj wasn’t available for further comment, but his PR team was quick to point out the findings of the Bermuda International Business Association (BIBA), an organization of island-based companies, which provide services and products to offshore clients. “The principal attraction of Bermuda is its established reputation,” says a recent BIBA press release. “Specifically, Bermuda has long been established as a financial centre, having sanctioned its first exempted company in the 1930s and now boasting a client base that includes many of the world's blue-chip companies and high net worth individuals.” And here I thought it was the island’s pink sand beaches and its close proximity to the East coast! Although there’s no doubting Bermuda’s well-respected standing within the international financial community. Major insurance and banking institutions have long set up shop here to profit from Bermuda’s favorable tax structure. It’s not quite Switzerland or the Cayman Islands for that matter, but there are indeed incentives for doing business here, which is largely the reason why Bermuda is such a special place. Tax deductions mean profit and profit leads to community incentives—what amounts to huge reinvestments in island infrastructure, education and outreach. So, the next time you execs consider chartering a Falcon 20 F-5 (see above), be sure to tell the captain you’re headed to Bermuda.