Bermuda Responds To UK's OT Review

by Jason Gorringe, Tax-News.com, London

11 January 2012

Bermuda has raised a number of issues for discussion with the United Kingdom as part of a consultation raised by the UK government on strengthening its relationship with its Overseas Territories (OTs), providing insight into Bermuda's policy trajectory for coming years.

Bermuda has used the opportunity of the consultation to highlight a number of areas where the territory would benefit from greater autonomy.

The first area relates to Bermuda's monetary policy following the recent downgrade by Standard and Poor's of the nation's sovereign credit rating to AA- based on the agency's revised rating methodology. The Bermuda government said that the review presents an "opportune time" to engage in discussions with the UK on the merits of a central bank model for Bermuda despite its status as an OT.

Bermuda has also requested greater powers in terms of its negotiation of international agreements, particularly those relating to promoting and protecting international investments, and those relating to the promotion of bilateral air links with other nations.

On this issue of additional powers for Bermuda, the government highlighted that with the changing regulatory environment smaller territories are increasingly looking to have their point of view heard in international fora. Bermuda called for OT Ministers and government officials to be empowered to have their territory's voice put across internationally at global events and conferences without the requirement to seek the authority of the UK. Bermuda also proposed that the UK government could assist the territories in mainstream marketing initiatives.

The government also announced in its response that it is considering diversifying the country's economy to facilitate the creation of an international shipwreck exploration industry to generate a new revenue stream for Bermuda. Under the proposals, Bermuda would introduce policies on licensing, fees and custom duties to create an attractive regime for individuals who engage in diving inside and outside the territorial waters of Bermuda for these purposes. Bermuda highlighted UK assistance on this initiative would be "most helpful".

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