ERROR RG P4 21.11.1996 A story in yesterday's newspaper incorrectly stated David Cooke was a lawyer with Appleby, Spurling & Kempe. He is with Conyers, Dill & Pearman.

Government will substantially slash registration fees to attract more foreign sales corporations (FSCs).

Finance Minister Grant Gibbons has told delegates to the annual FSC/DISC Tax Conference in Orlando that he intends to introduce legislation calling for the first reduction in fees since Bermuda won the designation as a US recognised FSC jurisdiction in 1988.

Small company fees would plunge from $1,700 to $500 and large company fees would drop $1,700 to $1,000 under the proposed measure.

Dr. Gibbons said, "We feel that a notable reduction in registration fees will clearly demonstrate Bermuda's commitment to being a leading FSC domicile. Fee reductions, coupled with Bermuda's proximity to the US and advantageous tax structure will provide significant attractions to US foreign sales corporations.'' Bank of Bermuda executive vice president, Barry Shailer, said, "We've stood out as being fairly expensive for what is a standard vehicle. Bermuda has the infrastructure and the wherewithal to do more with FSCs than can perhaps be done in other jurisdictions.

"We have expertise here in things like aircraft leasing and from a banking point of view, there are more services available. It gives us a bit more of a level playing field, with the fees being reduced.'' It is the first significant move toward attracting this business since Bermuda won jurisdiction rights as a result of the 1986 US/Bermuda tax treaty. Bermuda was late getting into this line of business and has played catch up to the US Virgin Islands (USVI) for the last ten years.

But many believe that Bermuda offers a number of competitive advantages over offshore rivals.

Said David Cooke, lawyer with Appleby, Spurling & Kempe, "The cost always made it a battle to get people to even look at Bermuda, even though we feel Bermuda is better set up to service the market. This reduction will make a real difference.

"Bermuda effectively cornered the market in the large equipment leasing FSCs, were that fee was never relevant because the size of the transactions was so large that Bermuda's fees were just a small part of the overall costs.'' More FSCs can be attracted to Bermuda because for some registered in the USVI, an issue has developed over the fact that although USVI registration fees start as low as $400, a franchise tax adds to the expense later.

Chairman of Bermuda's FSC Association Mark Moffat said, "We know the important role that FSCs play in making Bermuda one of the world's leading offshore business jurisdictions. By creating a fee structure that is more favourable we will ensure that Bermuda establishes a clear competitive edge over other FSC domiciles.'' Mr. Shailer cautioned, "You can't expect a big rush to Bermuda, though because a lot of these FSCs have already been set up in other jurisdictions.'' GOVERNMENT GVT BUSINESS BUC