Bermuda Denies Being 'Blacklisted' By United States Treasury

by Amanda Banks, Tax-News.com, London

28 October 2003

The Bermudan government has denied a report in the Barbados Advocate last week that alleged the island has been placed on a ‘blacklist’ of four countries by the United States Treasury Department because its tax treaty is unsatisfactory.

“Almost everything in the article is wrong,” said Donald Scott, financial secretary at the Ministry of Finance adding that Bermuda was not on the purported blacklist as the jurisdiction does not have a comprehensive double taxation treaty with the United States.

Mr Scott went on to explain that the confusion had come about after the US Treasury issued a notice stipulating that American taxpayers holding stock in foreign firms could only qualify for the new 15% rate of dividend tax if that country was included in the United State’s double taxation treaty network.

“What the Treasury notice says is that you must have a full tax treaty to qualify as a US taxpayer for the 15 percent capital gains rate on dividends received from a foreign country and it lists the countries that have full treaties. We cannot comment on the details of the Barbados treaty as we are not familiar with their treaty,” said Mr Scott in a Royal Gazette report.

He continues: “Bermuda has a Tax Information Exchange Agreement with the US and it was always understood that it was not a full tax treaty. The Treasury Notice simply confirms this understanding. There is no implication of unhappiness with the Bermuda TIEA as suggested in the article.”

The controversy stemmed from a piece in the Barbados Advocate saying Bermuda was on a list along with Barbados, the Netherland Antilles, and Russia who the US government considered needed to revise their tax treaties with the United states.

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