How do low income taxes affect Bermuda’s economy?

Bermuda’s policy of low income taxes has been a foundational element in its development as a prominent offshore financial centre. By maintaining these low tax rates, the territory has successfully attracted numerous insurance and investment companies to establish offices on the islands.

Because the government does not rely on income taxes as its primary source of funding, it instead derives most of its revenue through tariffs and various taxes on real estate and tourism. This fiscal structure supports an economy where international financial services and tourism account for the major share of the gross national product and provide employment for virtually the entire workforce.1