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Cannonier: We won’t sign tax deal before G8

Britain's overseas territories will not sign up to an international convention aimed at tackling tax evasion ahead of the G8 summit in Northern Ireland next week, Premier Craig Cannonier told an overseas news agency.

But Bermuda could tighten rules so that Bermuda-registered subsidiaries needed to have more economic substance on the Island to enjoy its tax benefits, he told Reuters in an interview yesterday.

Premier Cannonier told Reuters in an interview that the territories were ready to agree that wider sharing of information with international tax authorities was required but Cameron's aim of having the territories all commit to signing the convention was unlikely.

"My understanding is that we are not here to sign something, but simply to agree that everyone needs to get on par," he told Reuters in a telephone interview yesterday.

British Prime Minister David Cameron has invited the mainly Caribbean territories to London ahead of hosting the annual gathering of the G8 group of leading economies, at which he has put tax avoidance and evasion high on the agenda.

Though they share Britain's monarch as head of state, the UK government's writ doesn't run in the self-governing territories, so Cameron must rely on persuasion to secure an agreement.

A deal could give Cameron a coup against tax campaigners who question Britain's commitment to the issue, given the prominent role played by UK territories in facilitating tax evasion, avoidance and the hiding of stolen assets, Reuters reported.

Mr Cannonier said the territories had held conference calls ahead of their meeting with UK ministers in London this week and none had expressed a willingness to commit to signing the convention when they gather with Cameron at Downing Street on Saturday.

Mr Cannonier said Bermuda already met most of the standards in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, including having a register of beneficial owners of companies that other tax authorities can check.

However, he said the convention, drafted by the Organisation for Economic Co-operation and Development, a body of mainly rich nations, had potentially damaging elements for Bermuda.

"There's some clauses in there that we need to look at, that may need to be adjusted, and ... our Finance Ministry is going over it with a fine-tooth comb," he said.

In May, the territories, which also include the Cayman Islands, the British Virgin Islands and the Turks and Caicos Islands, agreed to share taxpayer information with the UK, France, Germany, Italy and Spain, but the convention will include many more countries and more information.

“Bermuda has been accused of facilitating tax avoidance by large companies,” the Reuter report said.

“Multinationals typically park intellectual property (IP) in letter-box companies on the island. These then charge fat fees for the use of the IP to affiliates in countries where the groups have big sales, thereby channelling profits to the island, which charges no corporate income taxes. Premier Cannonier said it was unfair to blame Bermuda for this since it was ‘only one link in the chain’ but added the country could tighten rules so that Bermuda-registered subsidiaries needed to have more economic substance on the Island to enjoy its tax benefits.”

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Published June 12, 2013 at 11:00 am (Updated June 12, 2013 at 11:23 am)

Cannonier: We won’t sign tax deal before G8

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