Minister Bob Richards: “This List Is Baseless”

June 19, 2015

Speaking on Bermuda being placed on EU list of “uncooperative” tax jurisdictions,” Deputy Premier and Minister of Finance Bob Richards said the “list is baseless and does not survive even cursory scrutiny.”

Speaking in the House of Assembly today [June 19], Minister Richards said, “On Wednesday June 17th 2015, the European Commission [EC] published a list of 30 “uncooperative” tax jurisdictions from around the world, including Bermuda. 11 EU Member States have Bermuda on their national blacklist.

“Bermuda has signed a large number of tax information exchange agreements with countries around the world and today we have over 80 treaty partners because of signing a multilateral TIEA called the Multilateral Tax Convention.

“The construction of this latest list is replete with errors, inconsistencies and opaque rationales. For example, one of the 11 EU member states, Bulgaria, has us on its national blacklist is even though it has not signed the Multilateral Tax Convention. That fact alone should disqualify Bulgaria’s blacklist from being counted by the European Commission for its list.

“This list is baseless and does not survive even cursory scrutiny. Something is very wrong with the selection process. The criterion for inclusion on this new “uncooperative” list is itself arbitrary. One has to be “blacklisted” by 10 or more EU member states: why not 9, 8, 7 or 13? No rationale is given.

“This speaks to a lack of transparency, something they say they are striving for. An absence of transparency leads to a reduction of credibility.”

Minister Richards’ full statement follows below:

Mr. Speaker, Honourable Members are aware that on Wednesday June 17th 2015, the European Commission [EC] published a list of 30 “uncooperative” tax jurisdictions from around the world, including Bermuda. It was stated that this action was part of their effort for tackling corporate tax avoidance by large multinational corporations. The criterion for inclusion on the list was that 10 or more EU member states had to list a country on their national blacklist. The list is not the Commission’s own list, based on EU criteria [which do not exist], but rather a compilation of blacklists from different Member States, all with different criteria for blacklisting.

Mr. Speaker, I can advise that 11 EU Member States have Bermuda on their national blacklist. Bermuda has signed a large number of tax information exchange agreements with countries around the world and today we have over 80 treaty partners because of signing a multilateral TIEA called the Multilateral Tax Convention. This convention is today’s international standard for tax cooperation and information exchange.

Mr. Speaker the construction of this latest list is replete with errors, inconsistencies and opaque rationales. For example, one of the 11 EU member states, Bulgaria, has us on its national blacklist is even though it has not signed the Multilateral Tax Convention. That fact alone should disqualify Bulgaria’s blacklist from being counted by the European Commission for its list.

Mr. Speaker, to complete a tax cooperation arrangement between two countries both countries have obligations to fulfill. Bermuda has fulfilled its obligations to institute tax cooperation with at least five of those 11 EU member states that have us on their national blacklist but they have not performed their obligations with respect to Bermuda, in one way or the other, so the arrangement remains incomplete: not because of failure on our part but failures on theirs.

Mr. Speaker, other relevant facts are as follows:

  • Italy and Spain indicated their intention to adopt the Multilateral Tax Convention in their blacklist criteria so as to delist Bermuda but have not yet done so;
  • Italy also publically announced earlier this year that it had taken Bermuda off its blacklist.
  • Latvia signed the Multilateral Convention and is still in the process of considering recognition of the Multilateral Convention, yet we are on its national blacklist;
  • Despite significant follow up, Belgium has not kept their promise made to us several years ago to send Bermuda documents to sign to take us off their blacklist.

Considering the above mentioned facts it is incomprehensible that we would be labelled by the European Commission as “uncooperative”.

Mr. Speaker this list is baseless and does not survive even cursory scrutiny. Something is very wrong with the selection process. The criterion for inclusion on this new “uncooperative” list is itself arbitrary. One has to be “blacklisted” by 10 or more EU member states: why not 9, 8, 7 or 13? No rationale is given. This speaks to a lack of transparency, something they say they are striving for. An absence of transparency leads to a reduction of credibility.

Mr. Speaker, there is little consistency in terms of standards for inclusion on their member states’ national blacklists. For example:

  • Some use a combination of tax transparency concerns and low tax rates; or
  • others are triggered by low tax rates alone; or
  • still others are triggered by a lack of a tax information exchange agreement.

Mr. Speaker, implementation of domestic tax policy is recognized by the UN, WTO, IMF, the OECD and the G20 as a jurisdiction’s sovereign right. Therefore any national list whose trigger includes the fact that your income tax rate is too low or that you have no income tax at all should be rejected by the EC. There’s nothing illegal or immoral in not having income tax.

Any national list that does not give recognition to the Multilateral Tax Convention as demonstrating cooperation in tax matters should be disqualified by the EC.

Mr. Speaker, furthermore, EU rules require that authorized decisions by the EU for matters pertaining to tax are to be made by unanimous decision. No such decision appears to have been made by the EU. The EC published its own list containing the arbitrary decision to use the number 10 as its criteria for a blacklist. It’s hard to imagine the UK voting to blacklist virtually all of its own OT’s and one of its CD’s.

Mr. Speaker, this list was published without any prior consultation with us and Government House has advised that neither was HM Treasury. Had we been consulted things may have been very different. Unfortunately, we note that the UK were and are part of the EU’s Platform for Tax Good Governance, which comprises representatives of all Member States and 15 organisations representing business, civil society and tax practitioners and which has met since 10 June 2013.

Mr. Speaker, sadly, it is clear that some branch of the UK Government has been fully involved in the process which has led this week to the publication of this list. At no time did any department of the UK Government see fit to inform and consult with the Bermuda Government. If they had done so, I could have raised this matter when I visited the Commission earlier this year and pointed out the inconsistencies and erroneous conclusions inherent in the promulgation of this list.

Mr. Speaker, under all aspects of the principle of fairness and justice, these five EU member states’ blacklists, and possibly more, were erroneously included in the count for Bermuda, thereby putting us over an arbitrarily chosen 10 EU member state threshold.

Mr. Speaker, Bermuda has done its part, we have signed every tax agreement the OECD and others have thrown at us and today we have over 80 treaty partners in every corner on this Earth, but at least five EU member states who have us on their national list have either not fulfilled their obligations or have not kept their promise made to Bermuda, yet we are the ones labelled as uncooperative. This process is fatally flawed.

Mr. Speaker Bermuda prides itself in being a highly cooperative business center and has gone the extra mile to be ahead of the curve in this respect. Yet there are forces out there that will do their utmost to undermine our good name and business model in their quest to raise taxes on people who can’t vote in their countries.

Mr. Speaker I have meetings in Brussels next week with members of the European Parliament, meetings I arranged several weeks ago, long before the events of this week. The European Commission’s actions of this week will be at the top of my agenda. I will also meet with the Secretary General and Head of Taxation in the OECD. Given the increasingly close cooperation between the OECD and the EU on tax policy, I will make it clear that Bermuda will do everything it can, with the resources at its disposal, to fight the use, by the OECD and EU Member States, of spurious and unfounded political slogans to denigrate small jurisdictions such as Bermuda, when we have made every effort to comply with the highest international standards on tax, financial regulation and international economic crime.

Thank you Mr. Speaker.

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Comments (22)

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  1. We thank you Minister Bob Richards for, “taking the bull by its horns”

    • Mockingjay says:

      I know he’s full off BULL.

      • Bermystyle says:

        Are you for real dude? I think it smells like BS coming out of your mouth…every time you open your trap!

      • Anbu says:

        As r u my friend as r u. Dont worry your beloved pee el pee will win the next election and then we can all sink into the ocean. Hopefully youre ghe first to go under. We’ll need the chum

  2. Terry says:

    Between the UK and the PLP we are doomed.
    Shalom.

  3. Sickofantz says:

    Terry Love. The UK hasn’t blacklisted us?

    • Terry says:

      Covering their royal butts.
      Shalom>Greece be unto you.

  4. Sony says:

    Good f bermuda

  5. Chaos Theory says:

    The OECD has also come out and said that the EU is not the right body for making these decisions, and has criticised the EU list as not being accurate or reflective or reality.

    Hopefully common sense will prevail

  6. Jus' Askin' says:

    “An absence of transparency leads to a reduction of credibility.”

    Such a wonderful quote from the minister ;-) ;-)

    Too bad he and his party, do not practice what he preaches :-D

    • Jus' Wonderin' says:

      Well the PLP/UBP never practiced that so where do we go from here lmfao…

    • A thought for today:
      “If you break your neck, if you have nothing to eat, if your house is on fire, then you’ve got a problem. Everything else is an inconvenience. Life is inconvenient. Life is lumpy. A lump in the oatmeal, a lump in the throat, and a lump in the breast are not the same kind of lump. One needs to learn the difference.” -Robert Fulghum, author (b. 4 Jun 1937)

    • Tough Love says:

      I was just thinking the same thing!!! LOL! This from the man who fuzzied up numbers and doesn’t put contracts out to tender.

      • Zevon says:

        How did putting the contract for Port Royal out to tender work out for ya?

  7. Mr AC 2017 says:

    Its full time for all the OFCs to form their own combined body to start lobbying and challenging the OECD and other supernatural organisations directly in some way as the net effect of the current push against OFCs is mass unemployment and financial collapse in ALL OFCs where you have large numbers of people employed in IB etc

  8. Alvin Williams says:

    The finance minister has now suggested that some one or some department in the UK government blew the whistle on Bermuda in regard to it’s low tax regime. When are we going to awaken from our colonial dream and realize we will get Queen’s honour awards; but little else when it comes to our national interests?
    We are paying this British appointed governor over a million dollars a year for his up keep; a rather expensive perk to show how British we are and in the mean time this government is busy cutting back social programs and dismantling important education grants which will now see Bermuda college students paying the full price to go to the Bermuda college; a former PLP government policy designed help Bermudian students.
    Yet I still hear voices saying why are the British doing this to us; we are it’s oldest colony yet they treat us like a step child. Why is the governor not speaking up on our behalf? The short answer to that is; that is not his role; his role is to look after Britain’s national interests and it is quite clear that it is not in the UK government’s interests to make it easy for it’s oldest colony Bermuda to continue to exist as a low tax jurisdiction. And while Bermuda’s finance minister goes over to England to plea with them to take he knife out of the back of Bermuda’s economy; he may get a better welcome from the many Bermudian economic refugees now residing in that country; The British appointed governor who the people of Bermuda so generously support financially who many believe mistakenly is here to look after Bermuda’s interests? Well he is enjoying a sail boat race to Bermuda and must be no doubt the envy of most of the British diplomatic Corps.

  9. Kind words can be short and easy to speak,but their echoes are truly endless…I expect to pass through this world but once, any good thing therefore I can do, or any kindness that I can show to any fellow creature,let me do it now, let me not severe PR neglect it,for I will not pass this way again…

  10. Let me not defer or neglect it….