Hamilton, Bermuda, November 10, 2017 – Reportage about hacked data from global law firm Appleby has highlighted the substantial lack of media understanding of offshore investment structures and Bermuda’s long-time reputation for tax transparency and cooperation with international authorities.
Bermuda is committed to the exchange of relevant information to legitimate regulatory, tax and law enforcement entities. These can request and receive information from Bermuda under information-sharing agreements, including TIEAs and a multi-lateral treaty with more than 100 countries.
Automatic exchange of financial information is also an established part of our economic system.
The island’s early adoption of OECD standards for Base Erosion and Profit Sharing (BEPS) compliance clearly demonstrates this transparency via several agreements that ensure automatic transmission of taxpayer financial data to relevant authorities.
Notably, Bermuda is a signatory to the Multilateral Competent Authority Agreement for automatic exchange of financial account information via Common Reporting Standard (CRS) and Country-by-Country (CbC) reports. The island has also signed a Model 2 intergovernmental agreement with the US under the Foreign Account Tax Compliance Act (FATCA), again, enabling automatic exchange of information from Bermuda-based financial institutions.
As a direct result of meeting these stringent standards, Bermuda this fall was the first overseas territory to be awarded whitelist status by France for CbC reporting. Bermuda is also judged “largely compliant” by the OECD Global Forum rating following a peer-review process of tax-transparency standards-a rating shared by Canada, Germany and Norway, among other nations.
Additionally, the UK has an agreement with all its Overseas Territories under which Bermuda shares information within 24 hours. Our 70-year-old register-with a starting threshold at incorporation of 10 percent beneficial ownership (vs UK and others at 25 percent-is continuously updated when shares in a company are transferred, as opposed to citing dates of incorporation or annual returns, as is practice in the UK and other jurisdictions.
The issue of privacy versus secrecy has also been confused. Privacy provides protection over confidential information within a well-regulated, safe environment-yet ensures sharing with tax authorities under Bermuda’s global treaties. Secrecy, by contrast, enables concealment of information that should be disclosed. Given Bermuda’s strong record on compliance and global transparency, our system respects privacy, yet shuns secrecy.
It should also be noted that “tax-haven” is a badly-understood term, particularly by non-trade media. Bermuda does not qualify as a tax haven under a clear OECD definition that stipulates criteria, including lack of transparency and lack of information exchange. No or nominal tax is not sufficient to classify a country as a tax haven. OECD definitions, notwithstanding, the term “tax haven” is synonymous with tax evasion and secrecy-neither of which describe Bermuda.
Bermuda understands and embraces the worldwide movement towards greater financial transparency and regulatory cooperation and continues to commit to international tax disclosure and compliance. We’ve shown leadership in this sphere and have helped drive global anti-money-laundering directives and anti-terrorist financing standards. These factors differentiate Bermuda from other financial centres, and we stand by that reputation. Response from Bermuda industry groups underscores our market’s commitment to transparency:
“Bermuda is a transparent jurisdiction. We have robust regulatory standards and we cooperate and share information with tax authorities and law enforcement agencies. Bermuda is considered a leader on tax-transparency issues by the US Departments of Justice and State, the US Treasury, the OECD, the Financial Action Task Force (FATF) and G20 nations. Bermuda enforces the rules and understands the importance of global compliance and transparency.”
-Patrick Tannock, Chairman, Association of Bermuda International Companies (ABIC)
-Brad Kading, President & Executive Director, Association of Bermuda Insurers & Reinsurers (ABIR)
-Leah Scott, President, Bermuda Association of Licensed Trustees (BALT)
-Sylvia Oliveira, Director, Bermuda International Long Term Insurers and Reinsurers (BILTIR)
-Grainne Richmond, President, Bermuda Insurance Management Association (BIMA)