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Report: Bermuda to be blacklisted by EU

Bermuda is to be blacklisted by the EU, after the European Commission accused the island of "playing games", according to a Reuters report

David Burt said Bermuda was “preparing for any outcome” after Reuters reported that the island would be added to the European Union’s tax havens blacklist today.

EU finance ministers will meet today to confirm additions to the list, intended to combat tax avoidance by multinational companies and wealthy individuals.

The Premier said last night that the Government was aware of the report.

“We have been monitoring events closely for several days and have continued to engage at the highest levels of the various groups within the EU that play a role in the decision-making process,” Mr Burt said.

“Our message has been a clear and simple one: Bermuda is compliant and met the required standard before any recommendations were considered.

“We have had some support in making that case and we have spared no efforts in doing so. Tomorrow’s meeting is an important one and we are preparing for any outcome.”

Reuters reported that Britain had at first pushed other EU states not to include Bermuda on the list of jurisdictions said to be not co-operative on tax matters.

However, the agency said that the British lifted their objections after the European Commission argued that the island had been “playing games” to dodge EU requirements.

The information was said to come from minutes of a meeting of EU ambassadors held last Friday. The Reuters report added: “Bermuda was required to change its tax rules by the end of February, but added new loopholes in revised legislation and did not provide a final text by the deadline, the Commission said, according to the document.”

The agency report said that Barbados, Aruba and the Arab Sultanate of Oman are also on the expanded draft list, as well as “other jurisdictions in the Caribbean and the Pacific Ocean”.

The report added the United Arab Emirates was also on the draft list, but is likely to be dropped, because of support from Italy, whose representative argued that the UAE should be given until the end of this year to change its rules and comply with EU tax standards.

It is not clear what the consequences of blacklisting would be, as EU states have not yet agreed on sanctions. But stricter controls on financial transactions with the EU appear likely.Bermuda’s Economic Substance Act, which became law at the end of last year, was designed to address EU concerns about offshore shell companies used by multinationals to cut their tax bills elsewhere.

Mr Burt added: “Bermuda remains a jurisdiction of choice and our reputation of sound regulation and adherence to the highest standards has been validated across many assessments over several years.

“We are confident that whatever the outcome of tomorrow’s meeting in Brussels, the reputation will be maintained and an economic substance regime, compliant with the EU’s requirements, will continue to be implemented.”