Bermuda and nine other overseas territories decline to sign tax evasion deal

By added on 21/06/2013

Bermuda says it has not signed a tax avoidance treaty with Britain insisting that it would do nothing to jeopardise the island’s financial model or agreements signed in the past, reports Caribbean 360.

Premier Craig Cannonier told a news conference that that Bermuda and nine other British Overseas Territories (OTs) and Crown dependencies had declined to sign the tax treaty during talks in London with British Prime Minister David Cameron.

Cameron last week summoned Bermuda and five other OTs -- the Cayman Islands, British Virgin Islands, Turks and Caicos, Montserrat and Anguilla -- to London as he sought more transparency to end what he called the "scourge of tax evasion".

But Cannonier, who led his One Bermuda Alliance (OBA) to power in the December general elections, told reporters that “at least up to the time I left” none of the 10 countries had signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

The other countries at the talks were Gibraltar, Jersey, Guernsey and the Isle of Man.

Weekend reports out of London suggested the 10 countries had signed up to the deal during the meeting Prime Minister Cameron called ahead of a two-day G8 summit in Northern Ireland he hosted on Monday and Tuesday when leaders agreed new measures to clamp down on money launderers, illegal tax evaders and corporate tax avoiders.

The G8 governments agreed to give each other automatic access to information on their residents' tax affairs.

They will also require shell companies -- often used to exploit tax loopholes and invest money anonymously -- to identify their effective owners. The summit communiqué urged countries to "fight the scourge of tax evasion".

Finance Minister Bob Richards said Bermuda and other OTs were being used as the scapegoats for policy failures of larger countries, but more must be done to educate Europe about the island’s successful business model.

“First of all, the US is coming out of a recession; Europe and the UK are not. Unemployment remains very high in the UK. Budget deficits are ballooning. So it's a very difficult and negative environment over there.”

He said the OTs and Crown dependencies were “to some extent being used as scapegoats and distractions for domestic policy failures.”

Richards told reporters in addition, there was a “corps of non-governmental organisations” which had “latched on to this notion that either multinational organisations or so-called tax havens are responsible for these poor countries not having any money.

“I was very surprised at the virulence of that sentiment that exists over there right now. Our message is to a significant extent being overwhelmed by that noise. Therefore we have to up our game.”

Richards said Bermuda had been more successful with its public relations in the US than in the UK.

“We just kind of assumed that because we have this relationship with Britain and we have these representatives in our midst at all times at a most senior level that somehow there’s an understanding over there of what Bermuda is all about.

“And I was surprised and dismayed to find out that that was not true. They don’t understand what Bermuda is all about. They continue to lump us in with other jurisdictions that are engaged in offshore banking that have secrecy laws that are engaged in money laundering. These are things that Bermuda is not involved in.”

The Bermuda delegation had stressed to Prime Minister Cameron that Bermuda and the other OTs had not been given a “fair opportunity” to examine the multilateral agreement that he wanted signed.

“It is important that you understand that Bermuda has not signed any agreement,” Cannonier said.

“We need to be responsible, and in being responsible we must look at every ‘T’ and make sure that it is crossed and every ‘I’ to make sure it is dotted. Because we do not want to put in jeopardy the financial model we have in Bermuda.”

Premier Cannonier said Bermuda had no problem with sharing tax information and providing information about beneficial ownership of companies domiciled here, and had been doing so for many years.

“When it comes to the highest regulations, Bermuda has always been among the forerunners,” he said, stressing that Bermuda’s model was not banking, but insurance.

“It is the businesses that are domiciled here that pay out in billions of dollars to ensure that many of the places like the UK and the United States can get back up running again and can create jobs and sustain jobs and put them back in the positions they were in before these things (catastrophes) happen.

“There is a great misunderstanding about what it is that we do. So we will continue to ensure that we get the message out there.”

Asked if the UK government accepted Bermuda’s request for more time, he replied “they have to.”

But Cannonier stressed that a signing ceremony had never been on the agenda.

“Sovereign nations like the United States and Canada are still coming to terms with this global agreement, so it’s going to be a while before we all come to a consensus as to exactly the direction we want to go in. They also are looking at this very closely and they are being responsible as well.

“So as we move towards tightening up the net of illegal activity I’m sure that some agreements will be found, but right now we are not at that position,” Cannonier told reporters.