BDA Rebut Report Calling Bermuda A Tax Haven

December 11, 2016

A new Oxfam report that targets Bermuda as a corporate “tax haven” ignores the substantial global economic contribution of the island, according to the Bermuda Business Development Agency [BDA].

“Unfortunately, many of the Oxfam assertions are based on flawed economics and lack of understanding,” said Ross Webber, Chief Executive Officer of the BDA.

“We consider it an inaccurate, ill-informed and disturbingly prejudiced attack on a small north-Atlantic archipelago that exerts an enormously positive impact globally—including on the very regions and populations Oxfam wrongly accuses us of threatening.

“Bermuda’s economic model is different to any other international financial centre,” Mr Webber said. “We support close to a half-million jobs globally, creating employment not only on the island itself, but also in onshore trading partners.

“That amounts to an estimated 300,000 jobs in the US and more than 70,000 in the UK through trade, foreign direct investment, and portfolio investment capacity. In this way, our 21-square-mile country facilitates critical economic globalisation.”

In particular, Bermuda helps preserve and grow the pensions of millions of onshore workers, including those in the UK. The island is a destination for financial investment by onshore pensions and governments amounting to more than $20 billion, he said.

The BDA added, “The island’s global reinsurance market is also vital to other countries’ economic health and survival. Bermuda is home to companies that provide 35 percent of capacity for Lloyd’s of London, and through payment of insurance claims, they are responsible for the rebuilding of cities, coastlines and communities around the world after the worst disasters.

“These include:

  • 20% of December 2015 UK flood losses
  • 62% of claims for the UK’s Buncefield oil-terminal fires of 2005
  • 9% of the World Trade Centre 9/11 claims
  • 25% of US medical-liability re/insurance
  • $22 billion to rebuild the US Gulf coast after Hurricanes Katrina, Rita and Wilma
  • Over half of reported liabilities from the 2010 New Zealand earthquake

A notable example of Bermuda’s value, especially to those most vulnerable, is the African Risk Capacity [ARC], Mr Webber noted.

“The ground-breaking initiative leverages Bermuda’s financial infrastructure and expertise to help African states become more resilient and recover faster from crippling drought and other weather-related disasters—allowing relief for the world’s least developed nations,” the BDA said.

“Another project, Blue Marble Microinsurance, involves a consortium of eight insurance companies, with operations in Bermuda, that have joint ventures designed to close the protection gap in the developing world. The first venture, in Zimbabwe, was announced last month; its aims are to provide food security, financial inclusion, and the advancement of microentrepreneurs.

“Oxfam’s labelling of Bermuda as a tax haven contradicts the Organisation for Economic Cooperation and Development [OECD], Webber said. In its 2009 report, Countering Offshore Tax Evasion, the OECD identified four factors that must allbe met to qualify as a tax haven: lack of transparency; lack of information exchange; no substantial activity; no or nominal tax on income.

“By contrast, Bermuda has real business conducted by physical companies in its jurisdiction; is transparent and compliant; and exchanges information via Tax Information Exchange Agreements [TIEAs] and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Bermuda also levies a 15.5-percent income tax on payroll.”

“Our unique tax system was designed to support our island’s infrastructure,” explained Mr Webber. “For over a century, we’ve used a consumption-based, duty-tax system to provide revenue for our government. Our fiscal sovereignty is an international right that should not be ignored.”

“We have long been at the forefront of transparency, cooperation and compliance with the highest international standards. That is more than evident in Bermuda’s numerous treaty partnerships with nations around the world and our leadership on guiding the evolution of regulatory best practices,” he said.

“Oxfam’s assertions may make great headlines, but they just don’t reflect economic reality. Cross-border trade via multi-national enterprises is the fuel that keeps global financial systems running smoothly.

“And Bermuda, as a genuine example of a quality financial centre, helps pave the way for growth in both developed and emerging markets, providing for vital economic development around the world.”

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Comments (14)

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  1. Fly it says:

    Maybe we just need to come up with a name for companies that put there Headquarters here so that they don’t have to pay big Taxes in their own countries. Let’s just call it the Bermuda Getaway.

  2. Good luck says:

    Are you sure they didn’t call us a Banana Republic?

  3. Comfortably numb says:

    Oxfam could stand a little scrutiny of its own: like many charities, the percentage of donations that actually makes it to the field where it is needed is relatively small. Far too much is eaten up ( no pun intended) by “administrative costs” and executive salaries.

  4. swing voter says:

    just thinking how little conversation is generated by this story. I know where our perceived ‘wealth’ comes from. But so many of us think ‘deh govment’ pays our salary, pension, social assistance. Some of even think its okay to walk of the job and protest against whatever we don’t like, and still expect ‘deh govment’ to pay regardless of our behavior, that CBA don’t matter. Bermudians better wake up

  5. Kathy says:

    Let’s face it! There is no denying it. We ARE a tax haven, whether we like it or not!

    Maybe we should just be proud of that fact and get on with it instead of trying to rosy everything up with numbers of jobs around the world!

    What is the number one reason they are all here in Bermuda? They DON’T want to pay taxes elsewhere…!

    • hmmm says:

      The insurance industry speed to market to take advantage of opportunities is a key reason why many companies set up here.

      With solvency II equivalence and a robust and efficient regulatory framework is another reason to come here or stay here.

      Let’s not try and blame it all on tax… Bermuda Insurance based Companies pay US taxes and UK taxes on their Income from those countries. they generally pay a withholding tax or equivalent if they want to distribute money back to Bermuda too.

    • Bermudian Insurance Professional says:

      No no no no! Bermuda is NOT a tax haven. Bermuda is a LOW tax environment. Everyone forgets everything that is brought into the island has a duty amount. TAX. Businesses pay tax to the government or BMA to operate, albeit a lower tax than any US jurisdiction. TAX. Employees pay payroll and pension taxes with every paycheck. TAX.

      All your doing by calling us a tax is haven is adding more fuel to the fire!

  6. SpinCycle says:

    Looks like it might be time for independence after all…What Bermuda’s business community does is perfectly legal by international standards, as such it appears to simply be a case of Britain wants some of what we got. Hands off! Might want to start investigating Oxfam for its financial practices as is often the case with unfounded allegations!

    • hmmm says:

      I don’t think your extreme reaction of Independence is warranted just because of some clearly uninformed narrow focus opinion from someone at Oxfam.

  7. reddamtibi says:

    Fark the political correctness! We should say it loud and proud! WE ARE A TAX HAVEN AND ARE OPEN FOR BUSINESS!! – because it is true…