Although last minute lobbying by interested groups forced the Government to back off a controversial $400 levy on Bermuda companies that provide certain services to international firms, not all local companies are happy with what has replaced it.

Bermuda International Business Association chairman Mr. Cummings Zuill, said that BIBA is still looking for clarification from the Finance Ministry on some issues.

The Corporate Services Tax Act 1995 won approval in the Lower House on Monday night, and should come into effect as of April 1.

Former Government Senate Leader and senior lawyer the Hon. Charles Collis, conceded yesterday that there was still unhappiness over the measure.

The last minute change saw the rate of tax become a four percent levy of gross earned revenue. Critics are fearful that still could hit service providers hard.

Mr. Collis said, "The advantage of this is that it spreads it around to all the services and varies the amount payable by each company according to the value of the services provided.

"There are some companies that do nothing and have very little expenses, but the extra $400 would have been a very high charge, whereas the four percent in those cases is more reasonable in relation to the services provided.

"People will probably continue with the companies, as opposed to a situation where if you were getting paid $500 and had to pay out $400, you just wouldn't bother to keep the business.'' But Mr. Collis said that there are still some people who would still be upset with the restructured tax.

"There are some people I know in the community who are very upset, because it represents a high proportion of what they know is their bottom line profit.

"If you are making ten percent profit on your expenses and the tax takes away four percent gross, that's a large percentage of your bottom line taken away.

"That's a big bite out of net profits. It's a fair comment to say that people generally are not happy. There's nobody in fact who is happy about the new tax.'' Based on what the Archer report projected would be $73 million in earnings for the local companies, the new tax is expected to raise $2.9 million in its first year, said the Finance Minister, the Hon. David Saul on Monday as the House of Assembly passed the bill without objection.

The $400 fee would have complicated matters, because some companies had all their services provided by one local company, while others dealt with three or more, Dr. Saul said. The four percent tax was simpler, and more sensible and efficient.

The legislation forces service providers to register with the Tax Commissioner and then regularly report gross earned revenue derived from the provision of services to, or on behalf of, exempted companies.

"Corporate services'' means the provision of corporate administrative, management or secretarial services. It also includes those local firms providing a registered office for exempted firms.

The fees of company directors and resident representatives are also taxable.

And although accountants are not exempt from the fee generally, they are when auditing financial statements.

Also deemed by the bill not to be corporate services for the purpose of the measure is banking business and the management of an insurance company by a local company.