Moscovici ‘surprised’ at EU blacklisting
A European Union economic commissioner was “surprised” that Bermuda was included on a list of noncooperative tax jurisdictions, the Premier said yesterday.
David Burt explained that the island was internationally recognised as having a robust reputation and his meeting in Brussels with Pierre Moscovici was a step towards further good relations with the EU.
He admitted that Bermuda had been affected by its inclusion on the list but made assurances that measures will be introduced to prevent any repeat of the “aberration”.
The Premier's comments came after Mr Moscovici, the EU Commissioner for Economic and Financial Affairs, Taxation and Customs, indicated that he anticipated a positive recommendation would be made to the EU's Code of Conduct Group next month.
The Government said yesterday: “On this basis, Bermuda is confident that we will be removed from the list of noncooperative jurisdictions for tax purposes at the earliest opportunity and we look forward to continued dialogue with the commission regarding Bermuda's enhancement to its investment funds regime.”
Its statement said that during the meeting, Mr Moscovici acknowledged “the level of co-operation between the European Union and Bermuda” and “encouraged us to continue our engagement”.
Mr Burt later told The Royal Gazette: “I think that it's accurate to say that the commissioner was surprised that Bermuda ended up on this list, due to this technical matter, because it's not in keeping with the record and reputation which Bermuda has in the international sphere. From that perspective, we had these conversations.
“It's the second time that I've met the commissioner and it was, without question, of a cordial nature.”
Mr Burt and Curtis Dickinson, the finance minister, explained earlier this month how a “minor technical omission” in Bermuda's economic substance regulations was not spotted and meant the island's submission to the EU was incomplete.
They said the matter was immediately rectified and an amended version was sent in time for proper consideration by the EU's Economic and Financial Affairs Council.
However, around the same time, the list of noncooperative tax jurisdictions was revised and Bermuda — said to have not delivered its commitments on time — was among the ten to be added.
Mr Burt said yesterday that the United Kingdom and others had noted the issue was rectified, so the Government was “confident that the commission would give a positive recommendation as the language had already been agreed”.
He added: “It was just unfortunate that, due to that drafting error, that line was omitted in our final submission.”
The Premier said: “I think that, without question, there is an impact to the jurisdiction from this listing, but I think that the Government has been clear with industry and clear with our international partners that this was an aberration which should not have happened and the Government is putting in place the mechanisms to ensure it doesn't happen again.
“The fact is that our approach to international affairs is often on an ad hoc basis and one of the things this has taught myself and the Minister of Finance, given that these issues are going to continue to occur over and over again and especially as the United Kingdom is expected to leave the European Union, is that we have to increase our capacity in the management of international relations.
“But this particular line being omitted is not something that should have happened and the quality-control mechanisms will be put in place, the Minister of Finance has assured me that that will happen.”
Mr Burt and Mr Dickinson led a team to Europe this week for a round of meetings.
The Premier believed it was important to show the EU leaders that Bermuda has “enjoyed a productive relationship” with the EU for years, has been one of a few jurisdictions with Solvency II equivalence and was “a jurisdiction that has been a leader in international tax transparency and compliance”.
He said: “This unfortunate technical omission, which led to Bermuda being on the list of noncooperative jurisdictions for tax purposes is not in keeping with that record.
“When the issue was identified it was immediately redressed and it was an important message to tell the policymakers directly — that this was not something that was intentional but it was something that was rectified immediately.
“The goal of the Government is to continue the productive engagement which we've had and the excellent relationship which we've had with the European Union over the years.”
Mr Burt admitted there was “concern” in the industry but he believed that any impact from the listing would be short-term and businesses had been “incredibly helpful” and supportive.
If the recommendation next month is positive, EU member states could approve Bermuda's delisting in May.
Mr Burt was due to return to the island today, while Mr Dickinson will hold more meetings in Brussels, Berlin, Paris and London.
The Premier said earlier: “Our goal here was to set the tone for Bermuda's continued close and fruitful relationship with the European Union.
“Today's meetings have been a welcome step in that direction and I am confident that the Minister of Finance will continue this productive engagement to support Bermuda's quick removal from the list of noncooperative jurisdictions for tax purposes.”