The Bermuda government, under the new leadership of Paula Cox, intends to adopt legislation in 2011 that will extend assurances granted to exempted companies under the Exempted Undertakings (Tax Protection) Act 1966 (“The Act”).  The plan was mentioned by Bermuda’s Governor in his November Throne Speech, which set out the government’s agenda for 2011.

The Act authorizes the Minister of Finance to grant to an exempted undertaking an assurance that it would be exempt from any Bermudian legislation imposing a tax on profits or income or any capital asset, gain or appreciation.  Under the terms of the Act, the assurances extend to any estate duty or inheritance tax that may otherwise apply to shares and debentures of the exempted undertaking.  The term of the assurances has been extended twice since the enactment of the Act and they are currently due to expire on March 28, 2016.

The Bermuda government intends to adopt legislation in 2011 that would amend the Act to create a further extension so that exempted undertakings will be protected from these taxes until the year 2035.