New economic substance requirements imposed by the European Union has resulted in a decrease in the number of new international companies and partnerships registered in Bermuda last year.
During the past year, 846 new companies registered in Bermuda, representing a decrease of 164 registrations when compared with 2018.
Speaking in the House on Friday, Finance Minister Curtis Dickinson said: “The international business sector provided 3,995 jobs in the economy, reﬂecting a growth of 0.3 percent year-over-year, or an increase of ten jobs.
“Over the ﬁrst nine months of 2019, the foreign exchange earnings of the international companies increased by $59.0 million to $1.53 billion, representing growth of 4.0 percent.”
But he said: “As of December 31, 2019, Bermuda maintained its position as the premier jurisdiction for captives, with a total of 715 captives writing gross premiums of approximately $40 billion.
“There were 22 new captives registered in 2019 compared with 19 in 2018.
“The Bermuda Monetary Authority (BMA) also registered a total of 69 new insurance entities in 2019, including 58 new (re)insurers and 11 intermediaries,” he added.
“The international insurance sector continues to show sound ﬁnancial strength and a ﬁrm market position.”
Meanwhile, small and medium-sized businesses are an important part of the Bermuda economy and they employ just over 6,300 persons, the majority of which are Bermudian.
“Based on statistics from the Ofﬁce of the Tax Commissioner, the remuneration paid, and head count of small businesses has grown in 2019. This growth can largely be attributed to the payroll tax concessions provided by the Government in 2018 for new small business entrepreneurs,” said the Minister.
“The Bermuda Economic Development Corporation (BEDC) has advised that between April 1 and 31 December 2019, 18 new businesses have been approved, creating 27 new jobs.
“This is a good example of how tax policy can be used to create jobs,” he said.
“In the medium-sized business sector, job growth and compensation have remained relatively unchanged year over year.
“The Government will again use tax policy to promote job creation in this sector of the economy by creating new payroll tax bands between the annual payroll tax thresholds of $200,000 and $500,000.
“As the new rates will be below the current rate of 7 percent for this sector, it is anticipated that this relief should allow them to expand their employee base.”
Bermuda’s struggling retail sales decreased during the first 11 months of 2019 by 2.4 percent to register at $1.02 billion.
“Many of the difﬁculties being faced by local retail stores are not unique to Bermuda as many brick-and-mortar stores have found it difﬁcult to compete with mostly web-based businesses like Amazon,” said Mr Dickinson.
“Retailers that are adapting best to this environment are those providing an enhanced customer experience, often utilising technology in their service delivery.
“The Government is very much aware of this pressure on certain segments of the retail sector and over the years has provided the following relief:
“Elimination of the employer portion of payroll tax during the months of January, February and March:
• Customs duty relief measures on capital goods for the renovation and refurbishment
of retail shops
• Targeted payroll tax relief to retailers whose annual payrolls are greater than $1 million.
On that note, the Minister said: “The Government will continue to ﬁnd ways to assist this important sector of the economy.”