Revised Version Of Economic Substance Act
The House of Assembly is currently discussing the ‘Economic Substance Act 2018’, with the previous Act having been replaced with a revised version.
The Premier had previously stated that the House of Assembly, which normally meets on Fridays, would meet again today to consider the Economic Substance Act 2018, saying, “We intended to rise for the Christmas break after completing today’s business but with the support of the Opposition and the agreement of the Speaker of the House, we will meet on Monday to consider and pass this important Bill.”
The Bill is currently receiving bipartisan support, with MPs on both sides of the aisle speaking in support of the Bill, noting that the island stands together against external pressures directed at our financial service sector, and we will have audio of those comments later on.
The Bill’s explanatory memorandum states it “imposes an obligation on an entity that is engaged in a relevant activity to maintain a substantial economic presence in Bermuda and, in that regard, comply with economic substance requirements.”
“The Government of Bermuda remains fully committed to ensuring that Bermuda will not be on any EU list of non-compliant jurisdictions and our position is supported by the BMA, the IAC, ABIC and ABIR, and all sectors of Bermuda’s international business community,” Finance Minister Curtis Dickinson previously said.
As background, last year the Council of the European Union named 17 jurisdictions as “non-cooperative tax jurisdictions”; with American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and the United Arab Emirates included on the original list, with the list changing as nations meet commitments set by the EU.
Bermuda, while not listed as a “non-cooperative jurisdiction,” was placed on a secondary list along with over 60 other nations and territories.
Citing the “existence of tax regimes that facilitate offshore structures which attract profits without real economic activity,” the Council said “the following jurisdictions are committed to addressing the concerns relating to economic substance by 2018: Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey and Vanuatu.”
The Bill is expected to pass in the House of Assembly today.
The revised Economic Substance Act 2018 follows below [PDF here]:
Sooooo, how many companies are going to leave because of this? Has this even been assessed?