Author Topic: Bermuda digs in against global corporate tax deal ‘It’s a sovereignty issue,’  (Read 276 times)

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Offline IsailedawayfromFR

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‘It’s a sovereignty issue,’ says Bermuda finance minister Curtis Dickinson
Bermuda’s political and business elite is responding to the G7 push for a minimum corporate income tax as it would to the approach of an Atlantic hurricane. Officials are looking to ride out the storm - and keep intact a 19th-century revenue regime that leaves company profits untouched.

In an interview with the Financial Times, Curtis Dickinson, Bermuda’s finance minister, said he was loath to introduce new levies while the island tax haven of about 64,000 people was still struggling to recover from both the Covid-19 pandemic and the financial crisis of 2008.

“Bermuda has a right to determine for itself what it thinks is an appropriate tax system for its jurisdiction,” he said.

“We have a system in place for 200 years. It’s not perfect. It does require some adjustment. But we would like to do that on our own and not have someone tell us to change our system to fit some global initiative... I would say it’s a sovereignty issue.”

Red tape
Taxing corporate profits would make Bermuda more bureaucratic and add complexity for business, Dickinson said, threatening its role as a global hub for reinsurance, the cover that insurance companies buy to protect themselves against claims arising from hurricanes, wildfires and other disasters. Bermuda currently raises revenue through taxes on payrolls and property, customs duties and fees charged to international businesses.

“Bermuda’s current tax system... is consumption based - it is a function of seeking to be simple to administer, simple to file,” he said. “That is the system we have had in place... It has not been changed to encourage people to move here. It has been what it has been. The system works for us.”

The pressure on tax havens grew this month when the G7 countries moved to close loopholes that multinationals use to reduce their tax bills, agreeing to a minimum global 15 per cent levy on corporate income. Whether anything will actually change, however, depends on wider global negotiations - meaning the implications for Bermuda remain hypothetical.

The sensitivity of the issue quickly becomes clear to a visitor in Hamilton. In more typical times, the Bermudian capital packs all the pizzazz of a place where the locals brag about the large number of actuaries in the neighbourhood. Start asking questions about taxes, and corporate lips press together even more tightly. Trade associations and leading companies alike either avoid responding or refer inquiries to Dickinson.

A man of carefully chosen words, the finance minister is a former Wall Street investment banker who worked at firms including Donaldson, Lufkin & Jenrette and Credit Suisse First Boston before entering government. He was educated at Morehouse College in Atlanta, the historically black institution where Martin Luther King Jr earned his undergraduate degree, and the Columbia University business school.

Dickinson’s argument is that it is unfair to group Bermuda with tax havens that have more corporate mailboxes than people. He said it was an “anomaly” when Google last decade shifted tens of billions of dollars through its Dutch holding company to Bermuda under an intellectual property licensing scheme called the “double Irish Dutch sandwich.” Google has scrapped the arrangement, which enabled it to delay paying US taxes.


https://www.irishtimes.com/business/economy/bermuda-digs-in-against-global-corporate-tax-deal-1.4600218
« Last Edit: June 22, 2021, 04:19:19 pm by IsailedawayfromFR »
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