Executives respond after Biden calls Bermuda a tax haven – The Royal Gazette
Tax reform: US President Joe Biden addresses a joint session of Congress, where he called Bermuda a tax haven (Melina Mara / The Washington Post)
Bermuda’s economic and political leaders have responded to US President Joe Biden calling the island a tax haven and appearing to have the island in the “crosshairs” of US tax reform.
They highlighted the support that the island’s international business sector provides to the US economy and said Bermuda needs to educate and advocate for these benefits. A delegation was also called to visit Washington DC.
Mr. Biden, in his first address to the joint session of the United States Congress last night, said: “A recent study shows that 55 of the country’s largest companies paid no federal income taxes last year. They made over $ 40 billion in profits.
“Many companies also evade taxes through tax havens, from Switzerland to Bermuda to the Cayman Islands. And they benefit from tax loopholes and deductions for relocating jobs and shifting profits overseas. It is not fair.
“We will reform corporate taxes so that they pay their fair share – and help them pay for the public investments that their businesses will benefit from.”
Cole Simons, Bermuda One Party opposition leader, said: “In one of the strongest parliaments in the world, President Biden has presented Bermuda in an unprecedented way, unlike any other president. American over the past 20 years He has done the unthinkable and distinguished Bermuda as a “tax haven” on the international stage, and that should be extremely alarming for Bermuda.
“Through the president, the Biden administration has made it clear that Bermuda is in their sights when it comes to tax reform and offshore financial centers. With a worldwide audience of millions, that’s not the kind of attention this island needs. “
Mr. Simons added: “Our government, a delegation from our global reinsurance companies, delegates from other actors in the international business sector, as well as the opposition, should hurry to Washington to educate and remind our American friends the essential role Bermuda plays. to support the US economy.
“Bermuda must not take this serious threat lightly, we must act now, as this could also be the start of a strategic threat imposed on all offshore centers by the OECD and the EU with regard to the ‘international harmonization of corporation tax’.
The Department of Finance, in a statement, said Bermuda has demonstrated a long-standing commitment to “transparency and regulatory excellence over the years to build a reputation as a good place to do business. quality”.
He said that considerable time and resources had been used to put in place “strong and robust legislative and operational frameworks to ensure compliance with international requirements”.
He added: “The comparative tax differences that exist on the international scene are due to the different models adopted by different jurisdictions. Our tax system, which was developed in the 19th century, was designed to be efficient and fair to Bermudan taxpayers. “
The ministry said, “We recognize the United States of America as a key strategic partner with which we have a close and productive relationship in business as well as in education and science.”
He said that when it comes to tax matters, he works closely with the US Internal Revenue Service through various tax information exchange agreements.
The Department also said: “Bermuda is actively participating in discussions on taxation and other related matters, either through relevant global meetings or through bilateral communications with foreign governments and officials. We will continue to work in this regard, with the United States and with other key allies. “
John Huff, CEO of the Bermuda Association of Insurers and Reinsurers, said: “With a new administration and changes in international leadership, it is important to continue to educate and advocate for the benefits that Bermuda’s international market brings. in the United States and other countries.
“There is a big difference between jurisdictions that are shrouded in secrecy and jurisdictions that combine revenue structures fit for purpose with international cooperation and transparency.”
Mr Huff said Bermuda’s position on transparency and beneficial ownership commitments demonstrate that it should not be “lumped together with others who take a very different approach.”
He added: “Bermuda has worked very hard to build a solid global reputation for transparency, world-class regulatory frameworks, and physical and economic substance requirements and tariffs when they are. internationally assessed. “
Mr Huff also pointed out that in the United States, members of Abir and other Bermuda re / insurers paid, among other things, $ 9.2 billion for the California wildfires in 2017-2019. ; paid $ 208.7 billion to US underwriters and cedants over the past 20 years; and contributed more than $ 65 billion between 2001 and 2017 in the United States.
In addition, they paid a total of $ 22 billion to rebuild the US Gulf and Florida coasts after seven hurricanes in 2004-2005, including nearly 30 percent of insured losses from Hurricanes Katrina, Rita and Wilma; support 25 percent of the US medical liability insurance and reinsurance market; and paid $ 2.5 billion in claims for terrorist attacks at New York’s World Trade Center.
Roland “Andy” Burrows, CEO of the Bermuda Business Development Agency, said: “The BDA, together with our industry associations, working groups and the Bermuda government, are committed to promoting open markets, accountability. business and innovation. Bermuda is recognized as having a strong framework for tax transparency and compliance with international standards.
“Through direct international advocacy, the BDA, since its inception, has successfully led business delegations to promote Bermuda’s world-class and internationally recognized platform that supports business solutions to complex business challenges.”
Mr. Burrows added: “Bermuda’s international business activities are important to the global economy. In 2017, bilateral trade with ten of its major trading partners totaled more than $ 65 billion.
“The United States is Bermuda’s most important trading partner, with bilateral trade between countries totaling $ 34 billion in 2017. Bermuda is an important strategic partner for the United States in many areas, including insurance, law enforcement, border security, aviation, space and navy research and education. Over 8,000 Americans live and work in Bermuda and 650,000 Americans normally visit Bermuda each year. Bermuda supported more than 315,000 jobs in the United States in 2017.
“With three decades of success in helping the United States close the protection gap, especially in hurricane, flood and fire coverage, Bermuda is now on the cusp of partnering with the United States. to reduce the protection gap against climate risks.
“Recognizing that international tax policy is the responsibility of the Bermuda government, the BDA stands ready to help the government dispel any misconceptions about our business model.”
This story has been updated to include quotes from the Department of Finance, Roland Andy Burrows, CEO of BDA, and John Huff, CEO of Abir.