Bermuda is in the American political spotlight once again with the publication of a report on "tax havens" which shows that the 100 largest US corporations have a combined total of 229 subsidiaries on the Island.

The Government Accountability Office (GAO), which includes the Island on its list of tax havens, showed that 83 of the 100 companies had at least one subsidiary in what it defined as a tax haven.

Citigroup, the recipient of some $45 billion in US Government aid during the market turmoil of recent months, topped the list of companies with Bermuda subsidiaries, with 19.

It is one of several corporations with Bermuda units to have received government bailouts, including General Motors (three subsidiaries on the Island), Bank of America (two), American International Group (five), Merrill Lynch (two) and Morgan Stanley (two).

The report was requested by US Senators Carl Levin, a Democrat from Michigan, and Byron Dorgan, a Democrat from North Dakota, who have pushed for tougher laws to fight offshore tax havens around the globe.

Sen. Levin, who leads the Senate Permanent Subcommittee on Investigations, has estimated abusive tax havens and offshore accounts cost the US government at least $100 billion a year in lost taxes.

"I think we should take action to shut down these tax dodgers and we will be introducing legislation to do just that," Sen. Dorgan was quoted as saying by The Associated Press.

The report lists 50 jurisdictions it describes as "tax havens or financial privacy jurisdictions", including many small islands, as well as some larger countries such as Switzerland and Ireland. The list was drawn up from sources including a the Organisation for Economic Co-operation and Development's (OECD) 2000 list and the National Bureau of Economic Research. It also uses an Internal Revenue Service "John Doe" summons issued in 2005 to compile its "tax havens" list.

The US Treasury, in its comments on the report, was clearly dissatisfied by the GAO's methodology in drawing up its list of "tax havens". In letter appended to the report, the US Treasury's Deputy Assistant Secretary for International Tax Affairs, Michael Mundaca, expressed his concern.

Mr. Mundaca said the 2000 OECD list was an out-of-date source that included many countries (including Bermuda) "from which we can obtain information and that have committed to establishing effective information exchange".

The "John Doe" summons list was also an inappropriate source, Mr. Mundaca added. "The IRS summons lists 34 jurisdictions from which the IRS was seeking information about individuals who had signature authority over bank accounts or credit cards issued by, through, or on behalf of financial institutions in those jurisdictions," Mr. Mundaca said, adding that it was "not at all" intended by the Treasury Department to be used as a list of tax havens.

Mr. Mundaca concluded that "because any such list is likely to be regarded as a blacklist and may be used as the basis for the imposition of sanctions or other negative measures, such a list may inappropriately negatively affect our economic and other relations with listed countries".

The report does however acknowledge that Bermuda does have a Tax Information Exchange (TIEA) in force with the US. Last week, Bermuda also signed a Mutual Legal Assistance Treaty (MLAT) with the US.

However, the political pressure continues to be cranked up on low-tax jurisdictions and the publication of the GAO report comes at a pivotal time for Bermuda. Tomorrow Barack Obama, who has vowed to "shut down the tax havens", takes office as US president. Last week saw Tyco Electronics announce its intention to change its country of incorporation from Bermuda to Switzerland — following the lead of Tyco International, Weatherford and Transocean, as well as Covidien, which plans to move to Ireland.

The GAO found that Citigroup had 427 subsidiaries based in tax havens and although it had 19 in Bermuda, that number was dwarfed by its 90 subsidiaries in the Cayman Islands and 91 in Luxembourg. Citigroup said in a statement that it has more than 4,000 subsidiaries around the globe "which enables us to serve hundreds of millions of individuals and institutions in more than 100 countries".

Another banking group, Wachovia, was second on the Bermuda list with 18 subsidiaries here. Wachovia was taken over last year by Wells Fargo, which received $25 billion in US bailout money last year.

Two oil company giants, ConocoPhillips and Chevron, who achieved a combined full-year net income of more than $30 billion in 2007, take third and fourth places on the Bermuda list, with 17 and 16 subsidiaries respectively.

Pharmaceutical giant Merck is fifth with 14, while Caterpillar, the machinery manufacturer that stands to cash in on incoming President Obama's economic stimulus and its focus on infrastructure spending, is equal sixth with 13. Drinks giant PepsiCo also has 13 subsidiaries in Bermuda.

AIG, an insurer which employs around 200 people on the Island and which has received some $150 billion of federal support to enable it to survive, has five subsidiaries based on the Island of its 18 in "tax havens" the GAO report shows.

Bermuda was one of eight jurisdictions to have more than 100 of the corporate subsidiaries listed, the report found. The most popular jurisdiction for the corporations, which was not named, was found to have 569.