David Fox reports The proposed corporate services tax is to figure very prominently in the Government's current tax review, past chairman of the Bermuda International Business Association (BIBA), Tom Davis has stated in his final report to BIBA members.

But Mr. Davis fired off a warning about the slow pace at which business matters are attended to by Government.

He said that the eagerly awaited report from the Corporate Matters Review Committee, chaired by Financial Secretary Peter Hardy was received by BIBA in March. The report includes many recommendations from BIBA and its members.

Mr. Davis said, "The Bermuda Government is a critical partner in our efforts to remain as the international domicile of choice. It is the Government which oversees the legislative and regulatory changes that have to be made in order to meet our ever changing customers' requirements.

"The changes that have been suggested will make it easier and much faster for our potential clients to do business with us while, at the same time, maintaining effective controls necessary to protect our good name.

"Of course, the next critical step is implementation. In their usual, effective manner, the legislative change committee, chaired by Tom Conyers, reviewed the report and provided the Ministry of Finance with an implementation plan.

"The fact that the necessary legislation will not be available before the new year brings up our frustration with the speed with which changes take place.

"Bermuda, as a business jurisdiction, has to reduce its time line for reacting to, let alone anticipation of, a changing international business environment.'' Mr. Davis said BIBA was encouraged by the new willingness of the Attorney General's Chambers to consider out sourcing some of its drafting needs.

But he said, "We still feel that more can be done to involve expertise available both locally and internationally in order to demonstrate to our referrers of business that our sense of urgency is at least equivalent to their own.'' Mr. Davis did point out the invaluable support BIBA received from the Bermuda Monetary Authority, various Government Ministers and the Premier.

He said that Government's current tax review came after lobbying from BIBA, and although it will require more time demands on BIBA members in assisting wherever they can, "it will be time better spent than the reactionary time we had to spend on two issues during the year.'' The first issue he alluded to was the public campaign by retailers who believed they were unfairly taxed, compared to BIBA members.

He said, "We were able to have some very constructive meetings with leading members of the retail industry and are grateful to them for discontinuing their campaign.

"As was pointed out, our competitors in other jurisdictions are always looking for ways to show our international clients that all may not be well in Bermuda and they have no hesitation in holding up a series of ads, albeit designed for domestic purposes, as symbols of instability.'' The second issue which he said affected BIBA members and Bermuda's ability to compete internationally was the corporate services tax (CST), even though BIBA members appreciated the need to contribute a fair share of the tax burden. But he said CST had two unfortunate consequences.

Mr. Davis said, "The first is that it is an export tax. It is taxing the services that we provide to international clients therefore putting us at a disadvantage to our competitors. The second is that it has the ironic effect of making it more beneficial to offer services in Bermuda as an exempted company than as a local company.'' WARNING SHOT TO GOVERNMENT: Tom Davis BUSINESS BUC