Dunkley: island can weather Trump tax cuts
NEW YORK (Bloomberg) – Bermuda Premier Michael Dunkley said the island will be able to attract businesses even as US President Donald Trump plans to reduce tax rates to help keep companies onshore.
“One of the things that I find very comforting about Bermuda is we’re paradise in the middle of the ocean,” Mr Dunkley said yesterday at an event at Bloomberg headquarters in New York. He cited a strong regulatory environment and intellectual capital as competitive advantages for the island.
Bermuda has attracted hedge funds and family offices to its tax-friendly jurisdiction. Some of those investment firms formed reinsurance ventures, making the island a home base for companies that provide backstops to primary carriers for risks including hurricanes, terrorist attacks and car crashes. Those offshore vehicles have helped some firms reduce the amount they pay to the US government by treating any gains as long-term profit.
“Without a doubt, the US tax system is significantly uncompetitive relative to the rest of the world,” Siva Subramaniam, a tax partner at PricewaterhouseCoopers said at the event. He said many companies have been trying to “level the playing field”.
Trump is seeking to cut the corporate tax rate to 15 per cent from 35 per cent, while House Republicans have a plan to set it at 20 per cent. Wealthy families are seeking a simplification of the tax code, according to Kristi Kuechler, president of the Family Office Exchange’s Private Investor Centre.
In addition to tax rates, political events and regulatory changes in the US and abroad have been spurring firms to consider moving their employees and headquarters.
The UK’s decision to part from the European Union has spurred companies to make changes.
XL Group relocated to Bermuda amid rule changes in Europe, saying that the island’s regulators would be best situated to approve its internal capital models.
Mr Dunkley said Bermuda would have to work closely with UK and EU leaders to make sure his constituents will have proper access to markets abroad.
“We want to protect our business base, we want to keep those markets open,” Mr Dunkley said. “There’s a lot of work that has to be done.”
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