HAMILTON, Bermuda – Bermuda signed a Double Taxation Agreement (DTA) with the Kingdom of Bahrain. The signing of the agreement took place at a ceremony in Washington, D.C. on Friday, April 23 and was attended by Senator the Honourable Lieutenant Colonel David A. Burch, OBE (MIL), ED, JP, Minister of Labour, Home Affairs and Housing, and H.E. Shaikh Ahmed bin Mohammed Al-Khalifa, Minister of Finance, who signed the agreement for the Kingdom of Bahrain.
This double taxation agreement marks the first full DTA signed by Bermuda. It includes a provision for the full exchange of information on criminal and civil tax matters between Bermuda and the Kingdom of Bahrain, consistent with the internationally agreed standard for transparency and exchange of information for tax purposes set by the Organization for Economic Cooperation and Development (OECD).
The DTA marks Bermuda’s 20th agreement incorporating provisions for the full exchange of information on criminal and civil tax matters. The DTA is a reciprocal arrangement between the Kingdom of Bahrain and Bermuda not to tax the repatriated income that a firm or a national of the parties domiciled in one country earned in (and paid taxes on) the other country.
Following the signing, the Hon. Paula A. Cox, JP, MP, who had to remain in Bermuda as Acting Premier, commented on Bermuda positioning itself as a key jurisdiction for Islamic financial product offerings. Acting Premier Cox Stated: “I am delighted today for Bermuda to sign this Double Taxation Agreement with the Kingdom of Bahrain and to mutually commit for us to work together to develop a multi-faceted relationship that will benefit every Ministry of our respective governments and thereby the people of Bermuda as well. The opportunities before us jointly are numerous and Bermuda and Bahrain have committed to establish a Joint Economic Committee that will meet annually to further develop economic ties between our countries.”
“This DTA is a significant step forward in enhancing business ties and investment opportunities between Bermuda and the Kingdom of Bahrain that will facilitate our outreach to other countries within the Gulf Cooperation Council (GCC). Currently, there are at least three Bermudian entities with a Bahrain interest, and we expect this number to grow significantly in the coming years. Indeed, we are seeing an increase in local service providers expanding their offerings to Middle East and North African markets utilizing the Kingdom of Bahrain as a gateway jurisdiction, in addition to offering Middle Eastern clients convenient access to Bermuda. Many local service providers have extensive experience of Islamic structured finance, including both conventional and Shari’iah investment funds. Moreover, it is likely that the global market for Islamic insurance, or Takaful, will continue to grow, opening exciting possibilities for Bermuda reinsurers.”
Mr. David Ezekiel, Chairman of the Association of Bermuda Insurance Companies (ABIC) stated: “Coming just after the conclusion of TIEA negotiations with India, this DTA with Bahrain is further good news for the Bermuda international business sector as Bahrain has a growing involvement in our market. Bahrain is emerging as a strong economic force in the Gulf region and already has significant dealings in the Bermuda market and the signing of the DTA will enhance current relationships and should make Bermuda even more attractive as a business partner for individuals and companies located in Bahrain. The Ministry is to be congratulated on maintaining the momentum in the signing of these international agreements with our current and prospective business partners.”
In addition to the DTA with the Kingdom of Bahrain, Bermuda has tax information exchange agreements with Australia, Ireland, New Zealand, the Netherlands, the Nordic Group (including Denmark, Finland, Iceland, Norway and Sweden and their associated territories the Faroe Islands and Greenland), Netherlands Antilles and Aruba, Mexico and Japan. Negotiations have been concluded with, among others, Canada, Spain, Belgium and Portugal, with these agreements.
Bermuda’s information exchange provisions within its DTA with the Kingdom of Bahrain includes all standard means to ensure due process is followed in tax information requests to Bermuda, including, for example, provisions to protect the confidentiality of information provided, as well as adhering to public policy, provisions related to protecting legal privilege, and anti-fishing provisions to ensure that requests for information from Bahrain are relevant to on-going tax investigations being conducted by Bahrain’s authorities.
