Bermuda is among 15 countries to be blacklisted by European Union (EU) Finance Ministers this week for failing to comply with good governance standards on tax within its deadline.
The island nation and global reinsurance hub could now potentially incur a set of countermeasures from EU member states, including increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions.
Bermuda Premier David Burt expressed his surprise and disappointment at the EU’s decision during a press conference yesterday, in which he stated that he believes the country has worked hard to craft a tax regime that now meets the required standards.
“Bermuda is compliant and we are confident that within a matter of weeks, that will be accepted by EU Member States and Bermuda will be removed from this list,” Burt said.
“Working together we will preserve investor and business confidence and continue to demonstrate that Bermuda has met the standard required by the EU,” he continued.
“I wish to assure the people of Bermuda that we do not anticipate any sanctions to be levied against us and this will in no way affect how we travel or otherwise interact with the EU.”
Burt’s confidence was shared by the UK Government, who stated via the Treasury that: “Bermuda has legislated to address the issue identified. In light of this we expect Bermuda, and other compliant jurisdictions, to be removed from the list at the next available opportunity.”
Bermuda’s industry groups have also pledged support for the market’s record on compliance and tax-transparency and are backing the government’s efforts to expedite the island’s removal from the list of ‘non-cooperative’ jurisdictions.
“We have every hope today’s EU determination will prove temporary,” said John Huff, President & CEO, Association of Bermuda Insurers & Reinsurers (ABIR). “While ABIR understands there is no immediate tangible impact to Bermuda or its markets, we are appreciative of the Bermuda government’s commitment to remedy the designation as soon as possible. There is bipartisan and industry consensus in Bermuda to meet international standards.”
“The Bermuda re/insurance market is a valuable partner in the EU and has paid over USD$72 billion to EU policyholders and cedents over the past 20 years,” he remarked.
“ABIR is confident policymakers will act in the best interests of consumers to ensure continued level-playing-field access to our market’s claims-paying capital and risk-management expertise.”
Roland Andy Burrows, CEO of the Bermuda Business Development Agency (BDA), also commented: “Bermuda is a world-respected platform for business that has always adhered to the gold standard.
“We stand firmly behind that reputation, and we commend our government’s consultative approach with the EU to date. Our industry stakeholders are committed to working with the government and regulators to ensure Bermuda is recognised as fully compliant. We look forward to a positive result as soon as possible.”
Sylvia Oliveira, Director, Bermuda International Long Term Insurers & Reinsurers (BILTIR), further stated: “The government of Bermuda assures us it is working at the highest levels to rectify the unfortunate placement of Bermuda on the EU’s list of non-cooperative jurisdictions.
“As a staunch member of Bermuda’s global business market, BILTIR stands firmly behind the island’s top-tier reputation. Our collective view is that Bermuda is a leader in tax transparency and compliance and continues to be a great place to do business.”
Additionally, Kathleen Bibbings, President, Bermuda Insurance Management Association (BIMA), said: “Bermuda’s captive insurance sector, like other industry partners throughout our market, has a long, proven track record of cooperation and transparency, and as a jurisdiction, we’ll work with the EU to meet requirements. We remain confident that Bermuda’s full compliance will be confirmed shortly.”
The EU agreed to begin compiling a list of non-cooperative jurisdictions in December 2017 to tackle risks of tax abuse and unfair competition.
The current blacklist includes five countries that have taken no commitments since the first list was adopted (American Samoa, Guam, Samoa, Trinidad and Tobago, and US Virgin Islands) and three that were on the first list and made commitments but did not follow up on them (Barbados, Unites Arab Emirates and Marshall Islands).
A further seven countries were moved from the EU’s grey list to the blacklist list this week for failing to follow up on their commitments in time (Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica).
