Bermuda

Richards comments on Google, says Bermuda ‘no tax haven’


By added on 04/06/2013

Bermuda is not to blame for companies such as Google using Bermudian subsidiaries to shelter billions of dollars from US and European tax authorities, Finance Minister Bob Richards says in an interview published today, reports the Royal Gazette.

Google has come under fire from British lawmakers for channelling billions of dollars a year through an Irish subsidiary to a Dutch sister company which then passes the money to another affiliate in Bermuda.

The use of such complex structures is common among multinationals, including Apple and Amazon, and has become a hot political topic on both sides of the Atlantic.

However, Mr Richards insisted in an interview with Reuters that Bermuda has not intentionally facilitated such profit shifting and gains little from the Bermuda-registered affiliates.

"Bermuda is not a tax haven," he said in the Reuters interview. "We didn't pass a law to say that the Googles of this world don't get taxed."

Bermuda has no personal or corporate income taxes because these are expensive taxes to administer, so focuses instead on taxing consumption and employment, Mr Richards said.

Big developed countries such as Britain have also increasingly shifted the tax burden to consumption, from income, in recent years.

Google's Bermudian subsidiary has no full-time staff and Mr Richards said that such nameplate companies are not important to the economy.

The company, meanwhile, has said that it complies with tax law in every country where it operates.

Mr Richards told Reuters it was impractical for Bermuda to change its tax rules to stop corporate profit shifting and that it is the responsibility of other countries to tackle the situation.

"The issue here is the tax laws of the G5, G8 (groups of big economies)," he said. "It's not the tax laws of Bermuda. It's easy to blame dots on the map."

Mr Richards said that countries such as the US and Britain should get their own house in order before criticising Bermuda.

"Those in glass houses should not throw stones. One of the biggest tax havens in the world is the state of Delaware. Everybody knows that. Some people would even call the City of London a tax haven," he told Reuters.

Delaware applies less stringent reporting requirements on companies than some other US states and European countries. This has allowed Delaware to become a major centre for corporate registrations.

Tax campaigners say that British governments have shied away from tough action on tax evasion and fraud because of fears that it could limit flows of cash into the City of London, a key driver of the economy and tax revenues.

Britain has been pressing its Overseas Territories, which also include the British Virgin Islands and Cayman Islands, to share more information to combat tax evasion.

Bermuda has already agreed to the automatic sharing of taxpayer information and collects information on beneficial ownership of companies registered there.

These measures, Mr Richards said, mean that Britain's latest initiatives are unlikely to make Bermuda less attractive for investment.

He said that Bermuda was also untroubled by recent changes to tax legislation aimed at making Britain a more attractive base for the insurance industry.

Mr Richards said he expected Bermuda's strength in this area — encouraged by low taxes and less onerous regulation than in the United States — would endure because the Island had built up a "nexus" of knowledge.