Bermuda Premier Responds To US Attacks

by Mike Godfrey, Tax-News.com, Washington

18 April 2002

Speaking on Tuesday, Bermudian Premier, Jennifer Smith, made her first public response to the accusations levelled at Bermuda by US lawmakers seeking to prevent US companies from reincorporating in the low tax jurisdiction.

Speaking to local newspaper, the Royal Gazette, during a visit to an insurance conference in New Orleans, the Premier observed that: 'We don't expect other countries to tell us how we should collect our tax, so I am not going to be in a position of commenting on how another country collects their tax.'

Following a New York Times report on the issue of offshore reincorporation, there has been a flurry of activity within the US Congress, and several pieces of new legislation have been introduced designed to remove the tax advantages for US companies which choose to relocate to Bermuda. The Senate Finance Committee, in a meeting on Friday, gave its active support to the moves.

However, Ms Smith was anxious to correct the misconception that Bermuda offers special tax incentives to overseas companies which decide to relocate there.

'They pay the same taxes that local businesses do, and in fact, because our taxes are based on consumption rather than company fees and licences and other things, our Customs' duties are among the highest in the world, and they pay those, just as everyone else does,' she explained, adding somewhat pointedly that the Bermudian tax system is over 100 years old, and was designed to suit the needs of residents, rather than of international business.

She told the newspaper that the influx of capital into the jurisdiction since the September 11 attacks was not just due to attractive corporate taxation levels, but to the region's reputation as a well regulated finance center, and to the intellectual capital attracted by the Island.

'When a new situation presented itself, because Bermuda is strategically located, because you have the best minds there, they were very quick to come up with a response,' she said of the US insurers and reinsurers who have recently moved their headquarters to the jurisdiction.

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