Covid, Cannabis Industry, Tax System & More

June 10, 2021

KPMG in Bermuda’s captive team is getting set to take part in the Bermuda Captive Conference next week.

A spokesperson said, “KPMG in Bermuda’s Captive team will be weighing in on some of the big issues facing the insurance industry at the Bermuda Captive Conference next week, from the impact of Covid-19, to insurance solutions for the cannabis industry and the prospects of an overhaul of the international tax system.

“KPMG is a sponsor of the annual event, which will take place in a fully-digital format next Monday and Tuesday. The conference traditionally attracts hundreds of delegates from Bermuda and around the world, including captive owners, risk managers, regulators and support services providers.

“Dr. Edward Fitzgerald, Head of Healthcare; Bron Turner, Director; and Will McCallum, Managing Director, Head of Tax, will appear on discussion panels.

Mark Allitt, Managing Director, Sector Lead, Insurance at KPMG, who also serves on the executive of the Bermuda Insurance Managers Association [BIMA], said: “KPMG has sponsored the Captive Conference for many years – the captive market is an important pillar for us and this is also a very important conference for Bermuda.

“It’s a great opportunity to reconnect with clients, talk with owners about how their captives can evolve to better meet their needs and advance the discussion, both through the conference sessions and the digital meeting platform.”

Dr. Fitzgerald will speak in Monday’s opening panel discussion entitled “The Pandemic – Is there a light at the end of the tunnel for your company and will the pandemic impact your captive?” He said there were three main points he wanted to get across.

“First, to stress that we should not think COVID-19 is over: it’s a multispeed recovery in many jurisdictions and some haven’t even started vaccine rollout yet,” Dr. Fitzgerald said. “The geopolitical and economic impact is going to be with us for some time even if it drops out of the headlines in the US and the UK.

“Second, when the pandemic does finally subside, we face a tsunami of after-effects, for healthcare particularly. There will be a huge wave of people who come out of the woodwork, who have missed treatment or screening and who have delayed problems. That will have significant implications for health systems, healthcare providers and insurers.

“Third, the nature of healthcare will have changed forever, through the digital transformation we are seeing. It’s been overdue for a long time, but stakeholders have not got on board until now. We are seeing much wider use of telehealth, remote monitoring and remote care. Healthcare will not go back to how it was.”

Bron Turner, Director, will be among the panelists discussing “New frontiers in risk mitigation – setting up a Bermuda Captive for your cannabis business” on Monday.

“This is a multibillion-dollar industry that is not fully being serviced by the commercial insurance market,” Mr. Turner said. “It’s heavily regulated, it’s complex and it’s new. “Therefore creating opportunity for captives to plug the gap and provide coverages that cannabis companies cannot get in the commercial market.

“Bermuda is open for business, having already licensed a cannabis captive and we have another couple in the pipeline that I’m aware of.”

“Canada has been at the centre of cannabis industry growth so far. But Mr Turner said new legislation going through the US Congress, which would remove federal hurdles for banks and insurers to service legitimate cannabis businesses, would be a catalyst for expansion of the industry in the US.

“On Tuesday, Mr. McCallum will feature on the taxation panel discussing “BEPS: A framework for the future”. BEPS is the Organisation for Economic Cooperation and Development’s Base Erosion and Profit Shifting two-pillar initiative.

“Pillar 1 focuses on the digital industry, but we as a panel will talk primarily about Pillar 2, which seeks to ensure that the income of multinationals in every jurisdiction is subject to a minimum level of tax, whether in that jurisdiction or by operation of rules that will have other jurisdictions coming in over the top and taxing them,” Mr. McCallum said.

“We’ve come through a year and a half of fairly intense deliberation and discussion. It’s changed during the last three months, as the US has really thrown its weight behind these initiatives.

“We’ll dovetail into the discussion the most recent proposals by the Biden administration, for another round of major US tax reform on the back of the reform we saw under Trump at the end of 2017, unwinding some of his proposals, but importantly, heavily emphasising the anti-base erosion perspective.”

Mr. McCallum added: “A regime intended to impose a minimum level of corporate tax on multinationals does not necessarily translate to a formal requirement that every country adopt a corporate tax system.

“The goal is just to make sure that, one way or another, multinationals do pay a certain level of tax. We’ll look at what it may mean for Bermuda and the captive industry in particular. There’s certainly a probability that the world is changing in a fairly fundamental way.”

“KPMG will have a virtual booth at the Bermuda Captive Conference. To register for the conference, visit here.”

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