Bermuda removed from EU tax grey list
Bermuda has been removed from the European Union's “grey list” on tax matters and added to the “white list” of co-operative jurisdictions.
EU finance ministers made the decision yesterday, while at the same time adding the island's offshore rival the Cayman Islands to its blacklist of countries deemed to be noncooperative on tax matters.
Panama, the Seychelles and Palau were also added to the blacklist. Turkey was given more time to avoid being listed, an EU document stated.
Bermuda was on Annex II of the list, also referred to as the grey list, which covers jurisdictions with pending commitments, and which were given deadline extensions to pass the necessary reforms to deliver on their commitments.
Bermuda and 15 other jurisdictions joined the white list, after they “managed to implement all the necessary reforms to comply with EU tax good governance principles ahead of the agreed deadline and are therefore removed from Annex II”, the European Council's Economic and Financial Affairs Council said.
In Bermuda's case, Ecofin was satisfied that the island had delivered on its last remaining economic substance commitment, dealing with EU concerns over collective investment vehicles.
David Burt, the Premier, said: “The recognition of Bermuda as co-operative is welcome validation of the global blue-chip status to which we operate, described by some as the Bermuda Standard.
“This is a positive follow-on to the very strong ratings that Bermuda attained in the recent assessment of our regime to combat money laundering, terrorist financing and proliferation financing, which, based on all such assessments done globally to date, placed Bermuda as No 1 for overall technical compliance and No 7 in effectiveness.
“The Ecofin decision completes a journey for our island, placing us in pole position to maintain our global competitiveness as a service and finance centre, including in fintech, for our world-class client base and other stakeholders.”
The other 15 to be delisted were Antigua & Barbuda, Armenia, Bahamas, Barbados, Belize, British Virgin Islands, Cabo Verde, Cook Islands, Curaçao, Marshall Islands, Montenegro, Nauru, Niue, Saint Kitts & Nevis and Vietnam.
Cayman was added to the blacklist because it “does not have appropriate measures in place relating to economic substance in the area of collective investment vehicles”, Ecofin said.
Alden McLaughlin, the Premier of the Cayman Islands, said the EU decision was “deeply disappointing”, because it did not consider changes on funds rules already passed. But he conceded the overhaul was enacted a few days after an EU deadline had lapsed.
Cayman, one of the world's largest hedge-fund centres, had agreed last year to address EU concerns over the economic substance of collective investment vehicles before the end of 2019. However, the necessary amendments to legislation were not passed until the end of last month.
Mr McLaughlin added: “It appears that the listing stems from Cayman's legislation not being in force by February 4, which was the date of the EU's Code of Conduct Group meeting to advise the EU finance ministers, prior to the finance ministers' decision regarding the listing today.”
Bermuda had a two-month spell on the blacklist last year, after a mistake in its economic substance regulations was corrected too late to meet an EU deadline.
Curtis Dickinson, the finance minister, said: “Today's announcement reflects the tremendous team effort between the Ministry of Finance, the Registrar of Companies, the Bermuda Monetary Authority, the Attorney-General's Chambers, and industry stakeholders. I would like to thank all stakeholders for their co-operation and support.
“We delivered on our commitment to implement all the necessary reforms to comply with EU tax good governance principles ahead of the agreed deadline, addressing all of the EU's concerns.
“Today's announcement is a testament to the hard work that goes into maintaining Bermuda's status as a co-operative jurisdiction and a global leader in international tax transparency.”
Meanwhile, Turkey, which failed to execute automatic transfers of tax information with all EU states, was granted more time to fulfil its commitments, because it has adopted legislative changes to allow data sharing, the Ecofin statement added.
Other jurisdictions on the blacklist are Fiji, Oman, Samoa, Trinidad & Tobago, Vanuatu and the three US territories of American Samoa, Guam, and the US Virgin Islands.