Bermuda

US Congress to deny federal contracts to Bermuda-based offshore companies — plan


By added on 18/06/2014

Bermuda has again been singled out and labelled “a tax haven” by US legislators as they last week attached an amendment to US federal funding measures, seeking to block federal contracts to former American companies involved in corporate inversions, reports the Royal Gazette.

A leading publisher of financial information, Bankrate Inc, reported at Bankrate.com: “The effort to make it harder for certain tax haven companies to do business with Uncle Sam was sponsored by two House Democrats, Rep Rosa DeLauro of Connecticut and Rep Lloyd Doggett of Texas.”

In a statement announcing the full House approval of the amendment, Rep Doggett said, “Some companies send their tax dollars to support our infrastructure and military, while others just send a post card that says, ‘You can find me in Bermuda or the Caymans. Glad you are not here.’”

Co-sponsor Rep DeLauro also decried the US services that these offshore companies get while he said they avoided paying for them with taxes.

He said in a joint statement with Rep Doggett, “The profits Fortune 500 companies claim were earned in Bermuda and the Cayman Islands in 2010 totalled over 1,600 percent of these countries’ entire yearly economic output.

“It defies logic to believe these companies conducted such a large amount of business there. They take advantage of our education system, our research and development incentives, our skilled workforce, and our infrastructure, all supported by US taxpayers, to build their businesses, and then turn around and abuse tax havens.

“These companies should not be allowed to pretend they are an American company when it is time to get federal contracts, then claim to be an offshore company when the tax bill comes.”

The article continued: “The restriction on federal contracts would apply only to the 2015 fiscal year, which runs from this October 1 to September 30, 2015.

“It also must make it through the Senate. That chamber’s Transportation, et al, funding measure, S 2438, is awaiting consideration by the full Senate.

If any differences with the House bill aren’t worked out then, the two bills must go through a conference committee.

“The good news is that Congress appears to be committed to finishing funding bills before the 2015 fiscal year begins.

“However, it’s less clear as to whether companies that are taking advantage of legal tax haven opportunities will suffer at least a little in the legislative process.”

The amendment was added to the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act of 2015 (THUD) also known as HR 4745.

Amendments are often pushed through the US legislature, sometimes without debate, by attaching them to a piece of less controversial House legislation.