Bermuda is no tax haven says finance minister | Reuters

3 Jun

“Bermuda is not a tax haven,” he said in a Reuters interview. “We didn’t pass a law to say that the Googles of this world don’t get taxed.”

The self-governed British Overseas Territory has no personal or corporate income taxes because these are expensive taxes to administer, so focuses instead on taxing consumption and employment, Richards said.

Big developed countries such as Britain have also increasingly shifted the tax burden to consumption, from income, in recent years.

Google’s Bermudan subsidiary has no full-time staff and Richards said that such nameplate companies are not important to the economy.

The company, meanwhile, has said that it complies with tax law in every country where it operates.

Richards said it was impractical for Bermuda to change its tax rules to stop corporate profit shifting and that it is the responsibility of other countries to tackle the situation.

BLAME GAME

“The issue here is the tax laws of the G5, G8 (groups of big economies),” he said. “It’s not the tax laws of Bermuda .. It’s easy to blame dots on the map.”

Richards said that countries such as the United States and Britain should get their own house in order before criticising Bermuda.

“Those in glass houses should not throw stones. One of the biggest tax havens in the world is the state of Delaware. Everybody knows that. Some people would even call the City of London a tax haven,” he said.

Delaware applies less stringent reporting requirements on companies than some other U.S. states and European countries. This has allowed Delaware to become a major centre for corporate registrations.

Tax campaigners say that British governments have shied away from tough action on tax evasion and fraud because of fears that it could limit flows of cash into the City of London, a key driver of the economy and tax revenues.

Britain has been pressing its Overseas Territories, which also include the British Virgin Islands and Cayman Islands, to share more information to combat tax evasion.

Bermuda has already agreed to the automatic sharing of taxpayer information and collects information on beneficial ownership of companies registered there.

These measures, Richards said, mean that Britain’s latest initiatives are unlikely to make the territory less attractive for investment.

He said that Bermuda was also untroubled by recent changes to tax legislation aimed at making Britain a more attractive base for the insurance industry.

Richards said he expected Bermuda’s strength in this area – encouraged by low taxes and less onerous regulation than in the United States – would endure because the islands had built up a “nexus” of knowledge.

via Bermuda is no tax haven says finance minister | Reuters.

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