Bermuda must now compete on non-tax criteria: Huff
Bermuda will have to compete on non-tax issues following the introduction of the 15% corporate income tax, according to the chief of the Bermuda reinsurers’ advocacy group.
John Huff, the chief executive officer of the Association of Bermuda Insurers and Reinsurers (ABIR), said the Bermuda Government also needs to become more efficient and consistent policy development and processing in areas like immigration.
Speaking on the final day of the Bermuda Risk Summit, Huff said the 15% corporate income tax had been widely accepted by leading re/insurers which was a testament to the collaboration that had taken place between the government and industry.
He said the 15% rate was “the new zero” which meant Bermuda would be taxing companies at the same level as other jurisdictions.
“There were very few jurisdictions that had a zero corporate income tax, we were quite unique in that situation,” he said. “If 15% is the new zero, 15 will be crowded, there will be the jurisdictions clustered around 15.
“That means Bermuda has to really pull its weight on creating a competitive environment on non-tax issues and some of those issues have been tough for Bermuda previously.
“If I think about immigration, that's an area where there will be a great deal of emphasis of how you support your international business community and make it competitive with a great deal of efficiency and public policies.
“It's not just the processing, but it's public policy and, and processing on the immigration front.”
Huff said a new consultation released on Friday by Economy and Labour Minister Jason Hayward appeared to be a positive step. While he had not had time to review it fully, he said some steps including widening eligibility for permanent resident certificates.
Huff said the announcement and an extensive study earlier this year recognizing the need increasing people of working age on the island were both welcome.
“Today our companies’ Bermuda workforces are around 70% either Bermudians, spouses of Bermudians or permanent residence certificate holders,” he said.
“Every one of my member companies would like to have that percentage higher. But to do that requires a long-term commitment for career development, training and education to have more jobs for Bermudians on island, but also a recognition that the way you build teams and build more more centres of excellence means sometimes you have to bring in people with expertise from other jurisdictions to help build that team, which will ultimately provide more opportunities for Bermudians.
“That means you have to have a robust immigration process that is not only predictable, it's sustainable, it's consistent and it's something you can count on for long term planning.”
Huff added that the local re/insurance industry and the Bermuda Monetary Authority were known for their speed to market.
“Now it's time for government to step up, whether that be immigration or other departments, to step up that speed to market urgency, that sense of responsiveness within all sectors. And I think that’s an area that's ripe for opportunity for Bermuda.”
Reflecting on the Bermuda Risk Summit, Huff said a theme throughout the three days had been on the importance of collaboration. This had been exemplified by the announcement of greater cooperation between Lloyd’s of London and Bermuda, but also the continued strength of the relationship between industry, the government and the Bermuda Monetary Authority, which has been described as a “holy trinity” or “the Bermuda Triangle”.
He said the island’s size remained an advantage in this, adding: “When we have guests that come to our industry in Bermuda for the first time, most are amazed by the accessibility, whether that's accessibility to industry, media, global CEOs, government, the regulators or to just stakeholders generally. That's just the MO for the Bermuda market.”
Huff said that collaboration was shown in the passage of the CIT, which surprised overseas observers with its speed of passage,
“Many people around the world said you guys will never get that done in time,” he said. “Never underestimate Bermuda in terms of being able to work together.”
He added: “We'll need additional legislation this year for a variety of different topics, but the tax credits will have to be in the end the actual setting up of a tax enforcement agency, it will be a lift by government as well.”
Huff said he is also watching the Tax Reform Commission closely and welcome the terms of reference which included the need for guardrails and fiscal responsibility.
ABIR members are likely to be the single largest contributors to the CIT, and earnings can be volatile in re/insurance, he said.
“We do have a business that has some cyclicality,” he said. “And we have some business where the most significant driver of the Bermudas economy is very dependent on many factors, including our significant leadership role in natural catastrophe cover.
“So, the government will have to have a much more sophisticated budgeting modelling system than they've ever had by changing the reliance on consumption to income. The world has changed now but that was the safety and stability of our consumption tax bases. It didn't have that much volatility.”
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