Laura Hershey consider what Bermuda as an international financial centre has achieved in 2010, most notably leading the way in the OECD new Peer Review process.
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In 2009, Bermuda was the first country to ascend to the white list as compiled by the G20 during its London Summit on 2 April 2009. This coincided with Bermuda signing its 12th tax information exchange agreement (TIEA) on 8 June 2009 with the Netherlands. Not long after, and in recognition of Bermuda’s significant and proactive progress in not only meeting but exceeding international standards in transparency and exchange of information for tax purposes, Bermuda was elected a Vice Chair of the Steering Group of the new Global Forum at the meeting of the Organisation of Economic Cooperation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes, held in Mexico City on 2 September 2009. Finally, by the end of the year it was announced by the OECD Global Forum that Bermuda was selected to host the third meeting of the 2011 Global Forum in spring 2011.
Never one to rest on its laurels, as 2010 draws to a close, Bermuda’s list of milestones has expanded. The OECD Global Forum’s work has expanded to include a Peer Review Process, evaluating all aspects of its members’ legal and regulatory frameworks. Bermuda was enthusiastic about being one of the first candidates to be peer reviewed, to open up the jurisdiction to its peers for intense scrutiny of all aspects of the jurisdiction, from its anti-money laundering legislation to the application of its tax information exchange agreements.
While Bermuda had for years successfully been evaluated by the OECD in its annual assessments, it was clear that the best and perhaps only way to finally and completely demonstrate once and for all that it complies with all aspects of the internationally agreed standard for transparency and exchange of information for tax purposes and to dispel myths about the basis of its consumption-based tax system, one that had been in place for over 100 years as an efficient and accomplished means of collecting tax revenue, was to lead from the front in embracing the OECD Global Forum’s Peer Review Process.
Thus, following a six-month exhaustive review which examined all aspects of Bermuda’s legal and regulatory framework against 10 identified essential elements, government officials from over 90 jurisdictions were provided with an in-depth report, copies of all Bermuda’s legislation and procedures as well as its international agreements, and given the opportunity to demand answers on any aspect of the jurisdiction they wanted.
The OECD Global Forum Peer Review Group then presented Bermuda’s report determinations to the full Global Forum membership. The reports reflected the extent to which the essential elements are in place and made recommendations for improvement where needed.
On 30 September, at the OECD third annual meeting of the new Global Forum in Singapore, the full membership of the Forum reviewed and ratified Bermuda’s Phase 1 Report, determining that Bermuda “meets all elements”, with some recommendations and remains on the OECD white list. Further, a report to the G20 in which Bermuda’s achievements are noted was agreed upon by the Global Forum for submission to the G20 Finance Ministers and leaders.
In addition to Bermuda, only one other jurisdiction's report of the initial eight submitted for adoption to the Global Forum in Singapore in September 2010 met all the elements, with some recommendations.
In commenting on Bermuda’s achievement, the Hon. Paula A. Cox, JP, MP, Premier of Bermuda and Minister of Finance stated: “To have been included in the first wave of the peer review process, immediately following the successful completion of Bermuda’s Annual Assessment was in itself a great undertaking, but for Bermuda to be one of two countries recognised as having all elements met, with some recommendations, reflects Bermuda’s longstanding commitment to not only meeting but exceeding international standards. Looking forward, the Ministry of Finance is reviewing the recommendations put forth by the Peer Review Group, and following consultation with industry stakeholders, responding appropriately.”
Bermuda now looks forward to its next achievement, hosting the 2011 OECD Global Forum, to be held at Bermuda’s Fairmont Southampton Hotel. At this meeting, from 31 May to 1 June 2011, an estimated further 54 peer review reports will be submitted for adoption by the Global Forum, including the majority of OECD and G20 countries, many of whom are undergoing combined Phase 1-2 reviews. Therefore, this meeting will be the first opportunity for the Global Forum to fully discuss the effectiveness of the Peer Review process and the outcomes of those reviews in promoting the adoption of international standards of transparency and exchange of information.
When Bermuda hosts an event, it is not only an opportunity to showcase Bermuda as a premier international finance centre, but also an internationally celebrated tourist destination. At the 2011 Global Forum, Bermuda will welcome heads of state, Ministers of Finance, the OECD Secretariat, high-level government officials from the leading countries underpinning the global financial system and global financial stability, and international media representatives.
Particularly, as the OECD Global Forum has recently expanded from 78 countries to over 90, it is in some cases the first opportunity for many member countries’ leaders and those who are watching the developments from back home to get a more complete picture of the breadth and depth of what Bermuda has to offer.
About the Author
Laura Hershey Laura Hershey is treaty advisor for the Ministry of Finance of the Government of Bermuda.