Insight and Intelligence on the London & International Insurance Markets 24 Apr 2018
Trouble in paradise
- 7 November 2017
It's not every day that I brush my teeth while listening to the premier of Bermuda getting a grilling from a hostile BBC journalist.
But this is what happened at 7.10am at the beginning of the month in the wake of the release of the Paradise Papers. Much of the furore has focused on the use of Bermuda as an asset base by the rich and famous (including head of state Queen Elizabeth II).
David Burt put up a strong performance in the face of some very aggressive and interruptive questioning from the BBC's Nick Robinson.
He pointed to Bermuda's excellent reputation as a strong regulator, fighter of organised crime and money laundering, a full and active co-operator with the OECD and proud signatory to 114 bilateral tax treaties.
Burt also strongly contested Bermuda's description as a tax haven, noting that despite a lack of corporation, income and withholding taxes the corporate tax cost on the island is still around 20 percent.
The premier then highlighted the strong collaborative relationship the Bermuda regime has with overseas tax authorities.
If foreign taxmen ask, Bermuda answers quickly.
The only heavy blow that Robinson managed to land was on the subject of transparency. Bermuda has had a full company register of beneficial ownership for 70 years - longer, in fact, than most onshore centres, including the UK.
However, unlike the UK, where anyone can find out who owns any British company, the Bermuda register is still 100 percent private. The relevant authorities can get the information if they request it, but it is not available to all by right.
You can imagine that as journalists we find this frustrating. The lack of transparency makes it harder to know what questions to ask and can deter all but the most dedicated of investigators.
There is no compelling defence against this charge. There is no reason for secrecy.
If Bermuda is really serious about its reputation, its company register should be thrown open to global gaze as soon as is practicable.
Since the global financial crisis the political winds have been set dead against offshore jurisdictions.
The US Neal bill that seeks to tax exported premiums sent overseas to group affiliate entities by US insurers simply will not die and has been reinserted into the major Trump tax reforms now going through the US legislature.
Because this time the regime is serious about massively reducing the headline rate of US corporation tax in return for removing loopholes, the Neal provisions have a much greater chance of succeeding than before.
Bermuda knows its future lies as a nimble and appropriate jurisdiction for international business, not as a place to hide wealth.
Full transparency is the ace up its sleeve and it should be played now.
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