Tax bills introduced in recent weeks by US legislators could impact not only American manufacturing corporations that have moved their headquarters to Bermuda, but also hit those Island insurers that have moved from the continent to the Island.

Two bills have been introduced to the US House of Representatives - by Rep. Richard Neal and Rep. Scott McInnis - and several American legislators have indicated they will put forward further bills, including Sen. Paul Wellstone and Sen. John Kerry.

In essence, the bills aim to levy US taxes on all income - including foreign revenues and sales - earned by corporations that reincorporate outside of the US.

The debate has largely focused on Bermuda-based companies such as Tyco, Global Crossing, Ingersoll-Rand and a company which has not yet "redomesticated", Stanley Works.

The Royal Gazette understands that insurance companies that have moved to Bermuda from the US - which could include PXRe, Scottish Annuity & Life Holdings and Everest Re - may also be affected in future years.

Jim Foster of Everest Re, when asked if the company was following the tax debate in the US Capital, said: "We are certainly attempting to follow."

He said he had seen the preliminary drafts of the bills that have been introduced by Scott McInnis and Richard Neal before Congress.

Mr. Foster added that the McInnis bill does not appear to bear on the company, but the Neal bill could "as it appears to be retroactive".

The bill put forward by Rep. Neal, which has been referred to as the "Corporate Patriot Enforcement Act of 2002", proposes to have the amendment apply to "corporate expatriate transactions" completed after September 11.

But an additional clause states that the amendment would also apply to such transactions completed before September 11, "but only with respect to taxable years of the acquiring corporation beginning after December 31, 2003".

Another company that was based in the US, but now holds its head office in Bermuda, is Trenwick. But newly appointed CFO Alan Hunte, told The Royal Gazette that he believed the company would not be affected by the proposed legislation.

He said Trenwick was "always looking at what was happening on Capitol Hill", but added that based on initial assessments of the legislation, Trenwick would not be affected as it moved to the Island not as a redomestication, but in the process of merging with LaSalle Re Limited and forming one Bermuda holding company.

The push to put tighter tax regulation on foreign-based companies that do business in the US, and have a large US shareholder base, follows a tax bill introduced in May 2001, that pushed for penalties on companies that do business with reinsurers headquartered outside the US.

That bill, which was put forward by Rep. Richard Neal and Rep. Nancy Johnson is still seen as a "threat" according to Washington.

Dr. Daniel Mitchell, who is a senior fellow at a Washington-based think tank, said: "The legislation sponsored by Congress representatives Nancy Johnson and Richard Neal would deny deductions for reinsurance companies paid to companies based in low-tax jurisdictions, and there should be little doubt that the main target is Bermuda."

Dr. Mitchell said the charge against legislation blocking offshore tax advantages was being led by the Washington-based Center for Freedom and Prosperity.

And the Center's president Andrew Quinlan told The Royal Gazette last week that the Johnson-Neal legislation, as it has been dubbed, is still being pushed for. Mr. Quinlan said: "We are working against such legislation - including (last year's) bill by Nancy Johnson and Richard Neal."

Mr. Quinlan said he is actively meeting with US legislators on what he sees as "bad, bad tax policy" and may be testifying before the powerful House Ways and Means Committee on the matter.