Bermuda prepares for economic substance monitoring assessment in December

29-07-2019

The OECD’s forum on harmful tax practices (FHTP) has formally approved Bermuda’s economic substance legislative framework, Curt Dickinson, Bermuda’s minister of finance, told the house on Friday.

But Dickinson warned there are two parts to the OECD’s assessment of the economic substance regime. While Bermuda’s legislative framework has been approved, its monitoring mechanism for ensuring compliance with the legislation will be assessed in December, he said. 

This assessment will involve the examination of the registrar’s resources and methodology, Dickinson said. “The registrar is in the process of developing an e-registry system that will allow him to collect and analyse economic substance information and to enforce economic substance requirements,” he added. 

The FHTP’s approval of Bermuda’s legislative framework took into account Bermuda’s most recent amendments exempting entities that are engaged in a relevant activity but resident for tax purposes in another jurisdiction from economic substance requirements. 

Bermuda, along with other crown dependencies and British overseas territories, developed its economic substance legislative framework in accordance with principles provided by the FHTP.

The OECD FHTP’s approval means Bermuda’s legal framework is in line with OECD standards, confirming its status as a non-harmful tax jurisdiction.

Dickinson said the ministry of finance has now turned its attention to other areas of Bermuda’s legislative framework requiring amendment to ensure its legislative framework remains in line with equivalent jurisdictions. 

“In order to harmonise our legislation with equivalent jurisdictions, Bermuda initiated preliminary  discussions with the relevant EU and OECD officials in April and those engagements are continuing, both at the political and technical levels, to ensure that any proposed amendments are acceptable to both the EU and the OECD,” Dickinson said.  

He said the most significant amendments under consideration relate to holding entities, finance and leasing, shipping and local companies. The EU’s code of conduct group must receive Bermuda’s proposed actions, for example draft bills, for dealing with these matters by August 26, for its review.  The COCG will also consider Bermuda’s proposals for its legislative framework for collective investment vehicles in September. 

OECD, Forum on Harmful Tax Practices, Curt Dickinson, Economic sunstance

Bermuda Re