Bermuda Business Community Reacts to Government's Deal With the OECD

Lisa Ugur, Tax-news.com, London

13 July 2000

As the offshore world gets to grips with the ramifications of the recent OECD and FATF reports into harmful tax practices and money laundering, details are beginning to emerge about those jurisdictions which have promised to be 'good boys', or more precisely about the measures they have pledged to clean up their respective acts, the assumption by the OECD and FATF being that there is plenty of cleaning up to do.

Bermuda was one of the six offshore financial centres which signed an agreement with the OECD in June in order to avoid being placed on the organisation's damaging list of tax havens. Last week Finance Minister Eugene Cox announced some of the aspects of the agreement, although all the details are still not yet known. During a speech to the House of Assembly, Mr Cox outlined what he called 'an expanded, but carefully planned integration' of the domestic economy into the global one.

Essentially the Bermuda goverment has pledged to exchange information about tax in Bermuda with other nations; introduce legislation for local and international companies to file or audit company accounts and make them available to Bermudian authorities; keep the same tax system; allow international companies to participate in previously sheltered sectors of the economy (these sectors have not yet been named) and finally, to implement recommendations made by an advisory committee made up of individuals from both the private and public sectors (by 2003 for the financial sector and by 2005 for other businesses).

Whilst Bermuda's international businesses have welcomed the government's moves to work with the OECD, they nonetheless are of the opinion that they have not been given enough information about proposed changes and are worried that a lack of information could lead to 'anxiety' in the market.

Raymond Medeiros, chairman of the Bermuda International Business Association (BIBA) said Cox's statement on Bermuda's commitment to the OECD raised a number of questions: 'These include precisely when and how Bermuda's legislation and regulations will be modified with respect to exchange of information, transparency and substantial activity, as set forth in the annex to the Government's letter of commitment to the OECD. The withholding of these details may result in anxiety amongst the stakeholders in Bermuda's international business community and their clients. The longer the delay, the larger the potential impact in this regard.'

His thoughts were echoed by the head of the Chamber of Commerce's International Division, who, whilst calling the OECD deal an "excellent result", said that the government needed to be careful to avoid a negative impact with local business. 'There are obviously going to be some changes to the way we operate right now, but we don't have much choice. We couldn't take the chance of being on the OECD list. We have the opportunity to see both local and international business flourish. But as in all these things, the devil is in the detail,' said Mr David Ezekiel.

Mr Ezekiel has no objections to the exchange of information, one of the key agreements between the OECD and the Bermuda government, as long as it is not to the detriment of local business. He said 'If properly handled we should continue to see growth in both sectors of the economy. In many ways it will not be business as usual, but I do not think that any changes should worry. But we have to make sure local business is not adversely affected. But this can be done through other legislation and we can decide what areas we allow businesses in.'

Bermuda seems to have, overall, a pretty relaxed attitude to the OECD deal. Mr Ezekiel summed it up when he said 'It is a fact of life that the world is moving on very quickly. Country after country is becoming less protectionist and we have to find a way of doing the same thing.'

.

Recommended

Write a comment