US tax reform bill might close Bermuda insurance "loophole"
The Coalition for American Insurance, a US lobbying group, has written to the members of the Ways and Means Committee in the US House of Representatives calling them to close the so-called Bermuda tax loophole as they look to amend the current US tax code.
In the letter the Coalition commended members for including language in the proposed Tax Cuts and Jobs Act (HR1) that it said fulfills a key priority of the framework it released earlier this year, namely ending incentives to ship jobs, capital and tax revenue overseas.
The letter stated that: “Specifically, we applaud the inclusion of Section 4303. This is of particular importance to the insurance industry and US-based insurers that provide American jobs and help families and businesses of all sizes manage financial risk and recover in the wake of disasters.
“As you may know, foreign-based insurers, many of which were once American companies, have set up their headquarters in places like Bermuda to avoid paying US taxes. This gives them an unfair competitive advantage over their US-based counterparts and hurts the American taxpayer, American insurance industry and our customers. They are able to do so because of a loophole in the current tax code that allows foreign-based insurers operating in the US to send their profits to their affiliates overseas as a way to circumvent federal taxes.
“Section 4303 will close this loophole and create a more level playing field for all insurers operating in the US. Unless this loophole is closed, and soon, American taxpayers stand to lose nearly $10 billion over the next decade as foreign-based insurers continue to keep their profits in places like Bermuda. That’s $10 billion that could be used to help fix roads and bridges here at home. Or $10 billion that could help pay for tax relief for middle-class families.”
The Coalition claims that the measure has bipartisan support. HR1 is under close scrutiny at the moment as it passes through Congress however, and its passage is by no means assured at present.
