Governor: ‘Bermuda is not a tax haven’
Whitehall does not consider Bermuda as a tax haven, according to Governor George Fergusson.
In a statement issued yesterday, the Governor said that British Prime Minister David Cameron appreciated Premier Craig Cannonier’s visit to London last weekend.
“The Premier’s visit to London last weekend was greatly appreciated by the Prime Minister, David Cameron,” Mr Fergusson said.
“In his speech at Saturday’s G8 ‘Open for Growth’ event to heads of state, NGOs and others, Mr Cameron commended the leadership shown by the Overseas Territory and Crown Dependency Premiers and Chief Ministers in the area of transparency.
“It is clear that Bermuda is not a tax haven. It has a long record of transparency on beneficial ownership and banking, and tight and widely respected regulation of financial services. Its core business is insurance and reinsurance, which is conducted to the highest standards.
“And non-resident bank deposits are not a feature of its economy. As the British Government has focused its G8 Presidency on promoting transparency and reducing aggressive tax avoidance, not least to ensure that developing countries can develop their own tax base, Bermuda has been well placed to stay in the front echelon of economies on tax and transparency issues.
“The standards in this area have risen rapidly in recent years. Bermuda, like other countries, including Britain, has had to, and will continue to have to, bring in measures to stay at the front. But Bermuda is doing this from a position of strength. The commitments made, with others, last weekend have not involved Bermuda having to move radically: it was already a leader in the number of the bilateral Tax Transparency Agreements which it had negotiated.
“As the global practice for this switches to an international, multilateral agreement, Bermuda already has extensive experience of operating tax transparency agreements with other countries. It will be able to set out provisions to safeguard its interests.
“Bermuda has had a proud record of benefiting from a reputation for probity. It is clear that, even in this now fast-moving area, Bermuda will remain among those at the front.”
The Governor’s statement echoes the position promoted by Mr Cannonier that Bermuda is a low tax jurisdiction but not a tax haven.
Asked to define a tax haven by British standards, Deputy Governor David Arkley said that the UK adopted the definition crafted by the OECD (see sidebar).
That definition stresses “nil or nominal taxes”, protection of personal information and lack of transparency.
Government is mulling the implications of signing onto the Multilateral Convention on Mutual Administrative Assistance on Tax Matters, a global standard of tax information exchange intended to combat tax evasion.
Bermuda’s position is that it agrees with it in principle and already abides by many of its provisions.
Tax Haven definition (Organisation for Economic Cooperation and Development):
1. Nil or only nominal taxes. Tax havens impose nil or only nominal taxes (generally or in special circumstances) and offer themselves, or are perceived to offer themselves, as a place to be used by non-residents to escape high taxes in their country of residence.
2. Protection of personal financial information. Tax havens typically have laws or administrative practices under which businesses and individuals can benefit from strict rules and other protections against scrutiny by foreign tax authorities. This prevents the transmittance of information about taxpayers who are benefiting from the low tax jurisdiction.
3. Lack of transparency. A lack of transparency in the operation of the legislative, legal or administrative provisions is another factor used to identify tax havens. The OECD is concerned that laws should be applied openly and consistently, and that information needed by foreign tax authorities to determine a taxpayer’s situation is available. Lack of transparency in one country can make it difficult, if not impossible, for other tax authorities to apply their laws effectively. ‘Secret rulings’, negotiated tax rates, or other practices that fail to apply the law openly and consistently are examples of a lack of transparency. Limited regulatory supervision or a government’s lack of legal access to financial records are contributing factors.