Premier Burt: Incoming OECD tax “will not” erode Bermuda’s domicile appeal
On the eve of visiting the OECD secretary-general in Paris, Bermuda Premier the Hon E. David Burt exclusively told The Insurer TV the new global minimum tax should be viewed as “an opportunity” as opposed to challenging the jurisdiction’s competitive edge.
Burt confirmed the implementation of a corporate income tax would be met with a reduction of other taxes, as long as the proposed new global minimum tax provides additional revenue.
“I believe that the successful implementation of this global initiative, combined with a reduction of existing taxes, will actually be a net positive and a growth factor for Bermuda,” Burt told The Insurer TV during his visit to Europe.
The proposed 15 percent corporate income tax is expected to be implemented in 2025. The agreement setting the tax in motion was signed by about 150 countries in 2021, and in August this year Bermuda’s government issued a consultation paper and invited interested parties to offer comments on the proposed tax regime.
Burt carved out some time to speak with The Insurer TV while travelling in the UK and Europe to meet various government and regulatory representatives to reaffirm Bermuda’s position as an upstanding jurisdiction.
“The thrust of the message is that Bermuda is a cooperative and transparent jurisdiction that keeps up with the latest international standards and prides itself on meeting those standards for our role in the global economy,” he said.
The trip included meetings with the Code of Conduct Group, which Burt said “has a lot of influence” on matters related to tax transparency for the European Union.
“It's important to introduce ourselves to the new chair and to speak about Bermuda's record and our continued commitment to meeting international standards of compliance and transparency,” he explained.
“It's important because oftentimes, countries are painted with a broad brush. And we happen to believe that our international financial services sector, our record, and our regulator, and also the government's aims to make sure that we combat money laundering and terrorist financing are key, and sometimes those things are overlooked.
“Bermuda has the sixth highest rating on anti-money laundering on the planet. And that is because we have made a concerted effort to ensure that Bermuda is a place for sound and stable businesses and for businesses that are doing the right thing.
“It's a place to raise capital. It's not a place to hide capital,” he asserted.
The government delegation also planned to stop in Paris for a meet and greet with the secretary-general of the OECD.
“Our work with the OECD has been long-standing,” said Burt.
“And what I will reiterate to the [OECD] secretary-general is the fact that Bermuda is committed to meeting its obligations. We signed up to the global minimum tax, we were one of the first signatories to that,” he added.
The proposed new tax regime is expected to reach up to 15 percent. In Bermuda it would apply to businesses that are part of multinational enterprise groups with annual revenues exceeding €750mn.
But Burt emphasised that Bermuda needed to align with the OECD-led global initiative.
“That is important for our insurance industry particularly, because they want to make sure they're operating in a jurisdiction with political stability, and where their place of operations is not brought into question,” added Burt.
The government has consulted extensively with the insurance industry during the tax adoption process, according to Burt, with the government recently releasing an initial consultation paper to solicit business responses.
“We'll be releasing another consultation paper in the near future to get more information and details from persons on views and thoughts on the implementation of this tax,” said Burt.
Bermuda emerged as a (re)insurance hub in late 1960s and remains inextricably bound to the industry.
According to the Association of Bermuda Insurers and Reinsurers, Bermuda-based firms make up about 36 percent of the global reinsurance market based on property/casualty net premiums earned, according to a recent report from rating agency AM Best.
And Burt expects insurance innovations will continue to thrive in Bermuda.
“We’ve seen a number of specialty insurers continue to grow in Bermuda, we've seen them expand into new lines, whether it be political risk, whether it be cyber,” said Burt.
Response to cyber attack
Ransomware threats hit home recently for Bermuda, with the government experiencing a severe cyber attack.
“The scale and scope of this attack was something like we have never seen,” said Burt.
He said the international tax portal with the OECD was not affected, nor were accounting or tax systems. But the breach did have an impact on email systems and other internal operations. Bermuda’s cyber response plan was implemented and a recovery process has begun.
“We all know that the attackers don't come through the front door, they find a way, oftentimes through social engineering, and we're just going to have to continue to tighten up our defences as we move forward,” said Burt.
Burt defended his actions following some media reports that criticised him for leaving Bermuda to attend meetings in Washington DC in the midst of the crisis, and for associating the attack with Russian actors before evidence was provided to justify his statements.
“The indications are that this originated from Russia-based actors. I was not stating the Russian government or Russian-based actors. That information has not yet changed.”
Burt also defended his trip to the US during the incident, saying he had to maintain his relationships with US lawmakers, whose actions could impact Bermuda and the global insurance industry.
He called the criticism “just politics”. Burt said his job is to ensure the island’s future place in the world as a continued financial services leader.
“And we can only do that by being in Washington DC, being in Brussels, being in Paris, being in London, speaking to policymakers, reinforcing the message that Bermuda is a cooperative and transparent jurisdiction.”
Watch this 13-minute video to learn more about:
- Why existing taxes could drop if a global minimum tax produces revenue
- The thrust of the Bermuda Premier’s discussion with the OECD secretary-general
- Why Burt is certain the insurance industry will remain rooted in Bermuda
- How Bermuda is recovering after a major cyber attack