© Copyright Puritan Faust, LLC 2002. All Rights Reserved Bermuda Law & Practice Boston College Fall Semester 2002 MBA-MJ60001 Comparison of “Safe Haven”

© Copyright Puritan Faust, LLC 2002. All Rights Reserved

Bermuda Law & PracticeBoston College Fall Semester 2002 MBA-MJ60001

Comparison of “Safe Haven” Countries: Legal & Business Factors

of Establishing a Maritime Shipping CompanyBermuda, Cayman Islands, Isle of Man, & Jersey

by Frank Maniscalco

Counselors at Law


Summary of Discussion

• Definitions: Tax Avoidance vs. Tax Evasion• Primary Concerns of Shipping Companies• Country Legal & Business Overviews

– Bermuda– Cayman Islands– Isle of Man– Jersey

• Special Factors of Bermuda• Special Factors of The Cayman Islands• Special Factors of The Isle of Man• Special Factors of Jersey


Tax Avoidance vs. Tax Evasion

• Tax Avoidance: Developing a Corporation’s Structure to Mitigate the Impact of Taxation on the Operation of the Business. Fiduciary

Responsibility of the Executives to Maximize Shareholder Value.

• Tax Evasion: Criminal Intent to Conceal (i) the true ownership of funds; (ii) origins of funds; (iii) maintain control over the funds; and/or (iv) change the form of the funds (e.g. Money Laundering)

• Watch Dogs of Tax Evasion:

– World-Wide, (OECD) Organization for Economic Cooperation & Development

– United States, USA Patriot Act (USAPA) Title III (10-26-01)

– Europe, European Union Tax Harmonization Initiatives


Primary Concerns of Shipping Companies

• Establishing a Shipping Company & Registering the Ships– Tax on Profits

– Tax on Tonnage

– Yearly Fees

– International Treaties

– Trade Regulations & Restrictions

– Economic Stability of Country of Origin

– World-View of Country of Origin

– Protection of Assets

– Corporate Support Infrastructure

– Legal Support

– Manpower

– Geographic Location


Country Legal & Business Overviews:Bermuda

•Tax on Profits: No Taxes For “Special Purpose Entities”•Tax on Tonnage: $ 3,000 to 5,000 +/- per Year•Yearly Fees: $ 1,780 to 27,825 plus Tonnage Annually•International Treaties: 6 Major Maritime Conventions/ No Int’l Arbitration •Trade Regulations & Restrictions: UK Restrictions•Economic Stability of Country of Origin: Deficit $166 M March 2001•World-View of Country of Origin: Neutral•Protection of Assets: Red Ensign (British Navy)•Corporate Support Infrastructure: Extremely Strong 10,000+ Int’l Companies•Legal Support: Common Law Court System•Manpower: 37,472 people low•Geographic Location: Ideal for Transatlantic


Country Legal & Business Overviews:Cayman Islands

•Tax on Profits: No Taxes For “Special Purpose Entities”•Tax on Tonnage: Yes, ??? Match UK•Yearly Fees: Yes, ??? Match UK•International Treaties: 6 Treaties & 1 Tax Info Exchange w/ US•Trade Regulations & Restrictions: Independent•Economic Stability of Country of Origin: Surplus $ 100,000•World-View of Country of Origin: “uncooperative” by OECD•Protection of Assets: Independent; Special Securities Protection•Corporate Support Infrastructure: Normal, 66,000+ Offshore Co.•Legal Support: Common Law Court System; Special Security of Assets•Manpower: 26,849 people very low•Geographic Location: Fair for Transatlantic


Country Legal & Business Overviews:Isle of Man

•Tax on Profits: None•Tax on Tonnage: None•Yearly Fees: Annual Fee £ 400 +/-•International Treaties: Non-EU member w/ 50+ Treaties•Trade Regulations & Restrictions: None•Economic Stability of Country of Origin: OECD “Harmful”•World-View of Country of Origin: Negative•Protection of Assets: Red Ensign (British Navy)•Corporate Support Infrastructure: Strong: Proximity to UK•Legal Support: English Common Law•Manpower: 39,685 + Ireland & UK Strong•Geographic Location: Ideal for Europe


Country Legal & Business Overviews:Jersey

•Tax on Profits: 0.5% to 2% of Profits•Tax on Tonnage: ???•Yearly Fees: ???•International Treaties: Non-EU member; Few Treaties•Trade Regulations & Restrictions: UK Restrictions•Economic Stability of Country of Origin: Deficit £7 Mil•World-View of Country of Origin: OECD“ harmful” Fighting•Protection of Assets: Red Ensign (British Navy)•Corporate Support Infrastructure: Strong: Proximity to Europe•Legal Support: English Common Law•Manpower: 87,186 + UK & Europe; Strong•Geographic Location: Ideal for Europe


Special Factors of Bermuda

• Electronic Transaction Act of 1999: Allows for Agreements to be entered into online.

• Skilled Mariners within Work Force

• Mid-Atlantic Location

• Recent Bad Press: Re: Tyco and other Companies


Special Factors of The Cayman Islands

• Secured Assets of Lender w/ Self Help thru “Golden Shares” Issued by a “Star Trust”. Creditor Friendly Arrangement

Lender Borrower

Cayman Co. # 1

Cayman Co. #2

STAR Trust

Valuable Subs

Golden Shares


Special Factors of The Isle of Man

• By entering into over 50+ Trade TreatiesIsle of Man Companies obtain preferentialregulatory status for import/exports.

•Required adherence to more formal regulationsfor day-to-day operations due to number of treaties.

• Can Draw on Highly Qualified Mariners from Ireland and UK.


Special Factors of Jersey

• Activity pursuing “Cooperative” status with the OECD& the EU Tax Harmonization Initiative.

• Can Draw on Highly Qualified Mariners from Ireland and UK.


The End

Counselors at Law

Contact Information:

Frank Maniscalcoemail: [email protected] URL: www.puritanfaust.com

Mobile: +1-617-312-5967Address: 14 Park Avenue; 1st Floor

Winchester, Massachusetts 01890-2009United States

mailto:[email protected]

http://www.puritanfaust.com/

Documents

© Copyright Puritan Faust, LLC 2002. All Rights Reserved Bermuda Law & Practice Boston College Fall Semester 2002 MBA-MJ60001 Comparison of “Safe Haven”