The Bermuda Business Development Agency (BDA) has issued a statement claiming that recent reporting about hacked data about investments that was obtained from global law firm Appleby (better known as the Paradise Papers) 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.
The BDA pointed out that 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 BDA said in its statement. “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.”
According to the BDA, as a direct result of meeting these stringent standards, this autumn Bermuda 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 BDA pointed out that 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 BDA said in the statement.
“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.”
The BDA also claimed that "tax-haven" is a badly-understood term, particularly by non-trade media and that 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.
The BDA statement concluded: “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 place where capital is put to work taking on insurance risk,” said Brad Kading, president & executive director, Association of Bermuda Insurers & Reinsurers. “It is a unique jurisdiction where its substantive insurance regulation has been recognised by both the EU and the US as robust and comparable, and where international regulatory standards are applied.
"MOU's with leading insurance regulators mean that cooperation with insurance supervisors in the EU, the US, and around the world is part of a routine. This regular information exchange is complemented by treaty commitments with more than 100 jurisdictions for taxpayer automatic exchange of information with global tax authorities. Bermuda's global (re)insurers provide significant amounts of capacity that make insurance markets more competitive. Bermuda's international regulatory and tax commitments are a necessary complement to the role our (re)insurers play in global markets."
"Bermuda is not a place to hide money, as implied by recent sensationalist press coverage,” added Sylvia Oliveira, director, Bermuda International Long Term Insurers and Reinsurers. “Bermuda is at the forefront of tax transparency, standing out from other international financial centres due to its high level of compliance, cooperation and exchange of information. The country is an early adopter of international tax-reporting standards and is actively committed to deterring money laundering and financial crime. Bermuda was the first overseas territory to be awarded whitelist status by France for Country-by-Country reporting."
BDA, Bermuda, Appleby, Association of Bermuda Insurers & Reinsurers, BIMA