Bermuda is to come under attack once again for being a tax haven The Royal Gazette reported in an article printed on April 9, 2003 called 'US tax ads to target Bermuda'.

This time, a series of television advertisements sponsored by a group called The Bermuda Project Team is slated to run in the United States which will question the patriotism of companies choosing to redomicile to tax havens like Bermuda.

I am getting sick and tired of reading about the United States looking for ways to curb the 'tax haven' Bermuda.

Not a week goes by without mention of it. What irritates me is that no one seems to be concentrating on why business and companies find their way to Bermuda. It is for the one-hundredth time not for tax reasons. If it were the reason, then the companies would not be here in the first place.

There are so many schemes for large corporations domiciled in the United States to get around paying taxes that the majority of them pay minimal taxes and some do not pay any taxes at all.

In 2000, Brian Duperreault, chairman and chief executive officer of ACE defended Bermuda against the then proposed Patriotic Tax Bill by stating the following: "Many US companies have themselves taken advantage of a tax shelter on invested assets provided by municipal bonds and corporate dividends, which aren't available to non-US insurers.

"Because of this, they had an approximately 19 percent corporate tax rate, as opposed to the 35 percent corporate rate paid by most US industrial companies. In addition, rather than the US$7 billion those pushing for the legislation estimate is paid in property/casualty tax revenue, the actual amount is closer to USD5 billion.

"Still worse," Mr. Duperreault said, "many of the companies accrued taxes on a GAAP basis, but didn't really hand over the money to the US Treasury.

"In fact, one of the loudest complainers and hardest campaigners for tax equity was actually seeking a refund on a current basis and accruing its taxes on a deferred basis. You know, it's hard for the US government to pay salaries out of 'deferred taxes'."

The reason why companies come to Bermuda is because of Bermuda's favourable regulatory environment. We have a private and public sector that works together to create a user-friendly business environment. Companies can set up and be operational within a six-week period if they have all of their paperwork in order and meet the stringent requirements of the vetting committees for companies wishing to incorporate here.

If the United States and other jurisdictions were to change their regulatory process then we would all be in trouble. However, it will take quite some time to break down the bureaucracies, which have been created in these countries.

More importantly, Bermuda has become an integral part of international business, particularly in the insurance and reinsurance sectors that if it were to fail, it could seriously jeopardise the long-term stability of the international insurance industry. Bermuda is one of the three global powerhouses for insurance and reinsurance with the other two major centres including New York and London.

Without Bermuda's infrastructure, it would have been impossible for the international insurance industry to replace some of the insurance capacity that was lost from the global insurance industry overnight as a result of September 11, 2001. For one moment, people and countries need to stop and think about the ramifications of not having a user-friendly jurisdiction like Bermuda left in the world.

September 11, 2001 plus the sustained bear market compounded by the war in Iraq and its aftermath have shown us just how delicate the world's financial power base is and just how interrelated all industries truly are.

If there was no jurisdiction like Bermuda that encourages free enterprise within carefully defined parameters designed by the people actually working in the world of finance, the world would be far worse off than it is today. A lot more businesses would have been forced out of business because they would have been unable to purchase insurance to meet credit requirements from banks and other financial institutions.

In addition, the Bermuda international insurance industry has caused other jurisdictions to watch their p's and q's and provide quality service because they are no longer the dominant force in the industry. Various jurisdictions have had to clean up underwriting practices and operational practices as a result of Bermuda because they can no longer treat clients indifferently.

Corporate inversions are legal according to United States law because it allows companies that are at an unfair competitive disadvantage to companies that operate outside the United States to invert their corporate headquarters outside the United States. Corporate inversions do nothing for the Bermuda economy.

However, they do help the United States economy because by allowing these inversions, companies can remain competitive with their foreign counterparts and hence they can keep people employed in the United States, who incidentally are all paying United States taxes.

The Bermuda Project Team and others like it need to look at how much of their manufacturing has already shifted outside of the United States to countries like Taiwan where labour costs are much cheaper than in the United States.

Then they need to calculate how much in tax dollars is lost in their economy because of the number of unskilled workers who can't find jobs in the United States and are collecting unemployment to see how much it is actually costing the United States. If they compared this number to the amount of taxes United States companies are saving by inverting their headquarters they would find the difference is largely in favour of the inversions.

Corporate inversions do nothing to help Bermuda except create bad press. They are blemishes to the name Bermuda has built up as being a credible offshore jurisdiction by providing real solutions to imbalances created in our global society because of our favourable regulatory environment.

We are not a tax haven! The United States has become more of a tax haven than any other country around the world for those who know how to work around the system.

Cathy Duffy is a Chartered Property Casualty Underwriter (CPCU) and is now a freelance writer. She is a former executive of Zurich Global Energy and has 15 years experience in the insurance industry. She writes on insurance issues in The Royal Gazette every Monday. Feedback crduffy@cwbda.bm.