EU Announce Bermuda Added To ‘Tax Blacklist’
[Updating]
Summary:
- EU announced that Bermuda has been added to the list of ‘non-cooperative jurisdictions for tax purposes’
- EU also added Aruba, Barbados, Belize, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates, Vanuatu, and there are now 15 jurisdictions on the list
- EU stated, “Bermuda facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and has not yet resolved this issue.”
- Premier David Burt said “This is a setback but we are confident that Bermuda will soon be removed from this list of non-cooperative jurisdictions for tax purposes.”
- The Premier also said, “The next meeting is in May and in the short interim period we will continue to make sure Member States are clear that Bermuda is compliant and that our legislation is fully in force and is being implemented. It is important to recognize that we do not anticipate any sanctions as against Bermuda as a jurisdiction and there will be no impact on any rights of travel or otherwise that Bermudians currently enjoy. This listing is for tax purposes only.”
- The Premier and Minister of Finance Curtis Dickinson held a press conference, the full video is below
Bermuda has been added to the list of ‘non-cooperative jurisdictions for tax purposes,’ the Council of the European Union has just announced.
The EU also added Aruba, Barbados, Belize, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates, Vanuatu, stating that the “jurisdictions did not implement the commitments they had made to the EU by the agreed deadline.”
Background
In 2017, 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.”
In December 2018, MPs passed the Economic Substance Bill 2018 in the House of Assembly, with the Bill, which was aimed at addressing the EU concerns, receiving bipartisan support.
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.”
EU Announcement
In a press release issued this morning [PDF], the EU said, “The Council adopted a revised EU list of non-cooperative jurisdictions for tax purposes.
“In addition to the 5 jurisdictions that were already listed, the revised EU list of non-cooperative jurisdictions now also includes the following 10 jurisdictions: Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates, Vanuatu.
“Those jurisdictions did not implement the commitments they had made to the EU by the agreed deadline.
“The list, which is part of the EU’s external strategy for taxation as defined by the Council, is intended to contribute to ongoing efforts to prevent tax avoidance and promote tax good governance worldwide.”
“Work on the list started in mid-2016 within the Council’s working group responsible for implementing an EU code of conduct on business taxation. In November 2016, the Council agreed on the process to be followed and laid down criteria for screening third country jurisdictions, namely:
- What a jurisdiction should fulfil to be considered compliant on tax transparency;
- What a jurisdiction should fulfil to be considered compliant on fair taxation;
- That OECD anti-BEPS [tax base erosion and profit shifting)] minimum standards are being implemented.
“On this basis, the Council approved and published conclusions containing an EU list of non-cooperative tax jurisdictions in December 2017. It also agreed on the further process, and recommended ‘defensive’ measures with regard to the listed jurisdictions.
“The first list was established following a screening of the 92 third country jurisdictions concerned conducted during 2017 and composed of the jurisdictions that did not take meaningful commitments to address deficiencies identified by the EU.
“Most commitments taken by third country jurisdictions were with a deadline of end 2018, whilst their enactment in national law was carefully monitored at technical level by the Code of Conduct Group on business taxation until the beginning of this year. The Council adopted the revised EU list of non-cooperative jurisdictions resulting from this exercise and endorsed a revised state of play with respect to pending commitments.
“The work on the EU list of non-cooperative jurisdictions is a dynamic process. The Council will continue to regularly review and update the list in the coming years, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments and the evolution of the listing criteria that the EU uses to establish the list.”
This has just been announced and we will update with reactions/further information as able.
Update 10.58am: The Government will hold a press conference at around 2.00pm this afternoon to address this, and we will stream it live.
Update 11.11am: The live stream replay of the EU press conference is below, they discussed a number of issues, including this list of what they deem to be ”non-cooperative jurisdictions for tax purposes.’
Update 11.15am: The EU has just released another statement [PDF] about the “revised EU list of noncooperative jurisdictions for tax purposes, adopted by the Council at its meeting held on 12 March 2019.”
As far as Bermuda, it states, “Bermuda facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and has not yet resolved this issue.
“Bermuda’s commitment to addressing the concerns relating to economic substance in the area of collective investment funds by the end of 2019 will be monitored.”
Update 11.32am: “This is a setback but we are confident that Bermuda will soon be removed from this list of non-cooperative jurisdictions for tax purposes.” said Premier David Burt after the news emanating from today’s ECOFIN meeting in Brussels.
The Premier advised that “although the decision to adopt today’s revised list was approved by all Member States, a significant reservation was expressed by the UK Government whose representative stated for the record:
“The UK agreement to the Council Conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes is on the basis that as set out in the Conclusions, jurisdictions should be removed as soon as possible after they have demonstrated they are compliant. The UK notes that Bermuda has legislated to address the issue identified. In light of this we expect Bermuda, and other compliant jurisdictions, to be removed from the list at the next available opportunity.”
The Premier continued: “The next meeting is in May and in the short interim period we will continue to make sure Member States are clear that Bermuda is compliant and that our legislation is fully in force and is being implemented. It is important to recognize that we do not anticipate any sanctions as against Bermuda as a jurisdiction and there will be no impact on any rights of travel or otherwise that Bermudians currently enjoy. This listing is for tax purposes only.”
The Minister of Finance Curtis Dickinson will hold a press conference later today to address the issues but in advance of that said: “Bermuda’s compliance with the EU requirements around economic substance is a matter of record and has been acknowledged by the UK Treasury and confirmed to Member States.
“In the coming days and weeks we will continue to work with industry partners to assure Bermuda businesses and investors that we will be removed from this list at the earliest opportunity. Bermuda remains a well regulated jurisdiction that has met every international standard over many years.”
Bernews will live stream the Minister’s press conference, which is expected to start at around 2.00pm this afternoon.
Update 2.33pm: The live broadcast has ended, and the 18-minute replay is below
What a bloody joke! Juncker is a clown
you are right , but is that the issue ?
Heads should roll as government is messing with the countrys entire livelihood. They did not even address why this happened at the press conference today which is insulting to us the voters…they know very well why the did not meet the deadline to provide documents etc and they should be open about it instead of defensive
Cayman insurance incorporations are already up before this fiasco, this will harm Bermuda and the government and BDA need to be full on crisis management mode which they appear not to be or care
Seriously—how has this happened. We clearly should not be on this list.
Who dropped the ball or misread the EU level of seriousness?
Game playing, loop holes–well congratulations–we have now been made an example of.
Our competitors are laughing at us and we deserve it.
Gvt best tell us PDQ–how and when we will get off this list or watch our business flow south.
The chickens are coming home to roost now for BDA.
Great! We should have the chicken farms up and running soon. Already have plenty of chicken farmers in training
Bermuda’s reputation will never be the same after this. For our peer jurisdictions to not be on the list (cayman, bvi, etc) but we are is the worst outcome imaginable.
So much PLP winning. Are we tired of so much winning yet?
The PLP Never “Win” in your eyes, Bermuda Loses all around here. If the Gov’t dropped the ball on this then they should be shamed! I will await their response.
No. They don’t. Incompetent.
They dropped the ball on a fundamental basic requirement.
They should resign from office.
their response ?
1.) it is not our fault
2.) we are thinking how to blame the OBA for this
The PLP need to understand that it makes no difference if you say Bermuda is not a tax haven. If the EU, or USA or the man in moon says you are, you need to take every step needed, even it it means deflating your swollen ego. It’s no use saying “we are special” and not do everything you can. It can be done, as shown by Cayman not being on the list. They obviously did take the right steps, rather than the up yours PLP approach.
25-11 the gift that keeps on losing.
Make no mistake. This is a colossal failure on the Bermuda Government’s part. Cayman will swoop to victory and seek to take more of our fund and insurance business sectors. Our politicians need to cease their indignation and start cooperative and collaborative communication. They don’t want the input of experts but they were clearly unsuccessful in going it alone with this subject matter. So, so disappointing…
Elections have consequences. And here we are.
well said
So Cayman with 120,000 incorporations and BVI with 400,000 incorporations manage to avoid the black list, but BDA with only 16,000 incorporations didn’t.
Someone truly dropped the ball on this issue and it appears to all stem from a missed deadline by the Government.
To be fair, they have been focused on getting the bus schedule right, and that’s really really difficult.
love this. Only it has to be said that it took 17 years to get the bus schedule drafted (apparently still subject to change). This little gem, in spite of promises only a short week or so ago, that it would NOT happen; was accomplished in a matter of weeks! Therefore, making it quicker in the race to the bottom………
If we can’t put a bus schedule out on time how are we supposed to hit a deadline with the EU? EU needs to chill out. Its coming bro, just gonna be a while.
17 years!
From Grey to Black List..what a shame. I hope Bermudians realize the implications it will have for International Business and the economy as a whole.
March 12th..a sad day for Bermuda.
” I hope Bermudians realize the implications it will have for International Business and the economy as a whole.”
I have my doubts.
soon you will see in the blogs , after a company left the island :
we don’t need you , bye bye
2019, for Bermuda has started out to be a disaster, and the so called leaders do not seem at all concerned,and else for the so called consultants what a joke….to think we tax payers have to pay these jokers… I think we should not bother to pay for the new taxes imposed on us.
I guess any law firm here in BDA that does Incorprations will see the business go to Cayman and BVI. Stay tune for the jobs being lost in our Law Firms. Corporate Administrators will be looking for jobs. Bad Bad move on the Premiers part.
One way or another, some way and somehow, no matter how you look at it, someone dropped the ball big time. Whatever gets said at today’s press conference, it’s not going to change that fact.
Interesting that Cayman, T&C, BVI and the Channel Islands all escaped.
Could it be that our Economic Substance Act 2018 left out some key elements that the EU was insisting on? Perhaps if we compare our Economic Substance Act with that of other jurisdictions …
“there will be no impact on any rights of travel or otherwise that Bermudians currently enjoy”
well that’s important …..
as long as they have the money .
now many European companies will think twice to do biz with Bermuda .
my guess is that may companies will call their staff back or switch them to other places in the world.
but that doesn’t matter , as long as we have a booming civil service.
The travel narrative is to pitch right at the PLP base.
The base do not wish to acknowledge how Bermuda gets its money–they only care about how it impacts them. Which is fair and normal. They care about travel not business restriction or Bermuda’s commercial reputation–I don’t mean this in a critical way at all–they are not outside trying to sell the country to new clients.
Note the Premier didn’t say what he thought about the potential hit to our reputation in the short term–he totally knows he can’t spin it in any way positive.
This is a monumental screw up and the EU addressed our insolence.
Its now about damage control and getting this right to get us off that list ASAP!
The Premier also said: “….there will be no impact on any rights of travel or otherwise that Bermudians currently enjoy”.
Talk about missing the point. Does he even know what this is about?
why?
“Bermuda facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and has not yet resolved this issue.
“Bermuda’s commitment to addressing the concerns relating to economic substance in the area of collective investment funds by the end of 2019 will be monitored.”
why wasn’t the EU Substance Act enough?
Bermuda is well and truly stuffed. Someone must be held accountable. Someone missed a deadline based on the EU’s statements. Who? Which Ministry? Which Minister completely allowed us to be led back to the plantation?
EU don’t run my country! If people want to leave then leave and don’t let door hit your a$$ on the way out! This is all politics and games being played by politicians while they rob from the people worldwide!
Do you not understand? This is about EU tax dollars going to pay for the high standard of living Bermudians enjoy. Without foreign tourists, foreign businesses and their foreign workers, Bermuda’s standard of living will plummet.
It is hard to overstate the importance of international support to the Bermudian economy. There is nothing else.
Ignorant and uninformed response.
my dear esteemed brainless friend. the entire rest of the world RUNS your country. think about it.
It’s nothing to do with the EU ‘running your country’. It’s the EU choosing who they do business with. And when they do that, they influence who the rest of the world does business with.
well done Burt and Co another PLP disaster for us all
Bermuda is not the only country on the list. The list is not permanent. It seems that it is subject to change as commitments are met.
In spite of this…I think our government is doing a great job considering the consistent attempts by opposition and opposition enthusiasts to not just oppose them politically for the betterment of Bermuda but to deliberately sabotage their efforts toward positive change for Bermuda, not to mention the constant vitriol from an assortment of posters who may or may not even be Bermudian… It’s tiresome because in my experience true Bermudians have enough strength of spirit to overcome whatever comes our way – we do not just throw our hands up in defeat at every challenge or faint at every wind or storm that blows. We are better than that. We problem solve. We find solutions. Even better than that – we work together! Plus we do not withdraw our support the instant things go sour.
I have every confidence that our government will do what needs to be done to rectify this. No government is perfect. There will always be something that is an issue but to the degree that they are continually working hard and working together for the people of Bermuda, they will continually have my support.
remarkable
lets work together is always after the PLP drove us in a pit.
otherwise it is only 25-11
” to deliberately sabotage their efforts toward positive change for Bermuda,”
You talking about the PLP and Americas cup?…or did you conveniently forget about how the plp has/had nothing to offer bermuda, except complaints.
Pissant (March 12th) wins the Internet. This is the problem. These idiots do not get this one simple fact.