Bermuda: TIEAs strengthen the Island as an international business centre

By added on 11/04/2012

Premier and Finance Minister Paula Cox said Bermuda’s accumulation of tax information exchange agreements is strengthening the Island as an international business centre, reports the Royal Gazette.

Ms Cox’s comments came after the latest Peer Review Group (PRG) report from the Organisation for Economic Cooperation and Development (OECD), which credited Bermuda with legislative changes that have demonstrated progress in the area of transparency and tax information exchange.

“These positive reviews benefit Bermuda as we take action to further enhance our international business product,” Ms Cox said.

“Transparency and cooperation are key to the long term survival of our economy. A positive PRG assessment is an excellent outcome that certainly serves to safeguard our status as a leading international financial centre.

“One may ask, after signing 32 TIEAs, what is the purpose of continuing to sign TIEAs and participating in the Peer Review Group assessment regime? The answer is that it protects Bermuda’s reputation as a premier international business domicile, the bedrock of our economy.”

The Premier further noted that TIEAs provide a useful launching pad to expand Bermuda’s global network of commercial and trade relations.

“Through the TIEA negotiation process, countries that previously may not have known much about Bermuda now gain more information and background on the services that we offer. As countries expand their commercial relations with us, we are able to diversify our global business network and further grow our economy by expanding into new markets.”

“The TIEAs are bringing results, as our global partners are taking note of Bermuda. During a recent trip to New York and Washington DC, Business Bermuda leveraged TIEA relationships to meet with a number of Consulates to promote business opportunities in Bermuda. These engagements will lead to growth in our economy which will provide opportunities for our service providers and create jobs in Bermuda.

“Bermuda is a vice-chair of the OECD Global Forum and firmly supports the work of the PRG because no one jurisdiction should profit from unfair competition in financial services. Jurisdictions that refuse to abide by the PRG’s global assessment regime may be viewed as raising the possibility of facilitating tax evasion, now recognised as a form of money laundering.

“Refusing to comply with the PRG assessment regime allows distortion by such jurisdictions taking business from Bermuda and other compliant members of the Global Forum.

“Migrating one’s business to a jurisdiction that does not comply with TIEAs and the PRG assessment regime is short sighted because clients in non-compliant international financial services centres will be targeted by the G20, OECD and others.

“One has only to look at some jurisdictions that had the misfortune to have a PRG assessment with a number of ‘element not in place’ Determinations. They were initially refused progression through the PRG assessment process and there was an immediate negative effect on their international business environment. Their governments publicly pledged to comply and work swiftly to remove the ‘element not in place’ determinations as soon as possible.”

The Premier added: “I applaud the efforts of the Ministry of Finance and their continued hard work in this area to cement Bermuda’s position as a global financial leader.

“The Government will continue to use TIEAs to expand into new markets and offer our local and international businesses additional opportunities in the global economy. Exposure to new markets will lead to more jobs and opportunities for Bermuda and Bermudians.”

In the original 2010 PRG Assessment report, Bermuda received eight of eight ‘element in place’ Determination and a Supplementary Assessment listed four additional Recommendations for consideration. In this most recent PRG Assessment, the OECD deleted two of these Recommendations as a nod to Bermuda’s significant progress in these areas. Specific achievements noted were the Competent Authority Agreements for administrative matters under Bermuda’s Tax Information Exchange Agreements (TIEAs) and the passage of the Specified Business Legislation Amendment Act 2011.