17 May 2019Analysis

EU removes Bermuda, Barbados and Aruba from tax haven blacklist

The Economic & Financial Affairs Council (ECOFIN) in Brussels has removed Bermuda, Barbados and Aruba from the list of non-cooperative tax jurisdictions, the so called EU 'blacklist'.

These three jurisdictions had been added to the blacklist in March 2019 after not modifying their tax regimes to comply with rules set by the EU Code of Conduct Group in December 2017, which relate to tax transparency, fair taxation, and the commitment to anti-base erosion and profit shifting (BEPS) measures. They were given 12 months to comply with the new rules.

Bermuda premier David Burt and finance minister Curtis Dickinson had explained to European tax officials the reasons for which there was a technical omission in its Economic Substance Regulations submission - which has now been corrected to the satisfaction of European authorities. Burt explained that one paragraph in the regulations, which appeared to be a duplication in almost identical language in a draft, was “unintentionally omitted”. He said that despite the omission being discovered and immediately addressed, the reinsertion of the omitted line “appears not to have been good enough for the EU”.

The decision has been welcomed by many industry figures in Bermuda, including from industry associations representing sectors ranging from re/insurance, captive insurance, trusts and family offices to asset management and local companies

“We applaud today’s decision and appreciate the expedited review by ECOFIN,” said Stephen Weinstein, deputy chair of the Bermuda Business Development Agency (BDA). “We’re thankful for the efforts of our Premier and Finance Minister to engage with the EU and provide transparency into Bermuda’s world-class regime. Our jurisdiction’s updated regulatory and legislative framework mirrors existing practices in our international business market, exemplifying the highest standards of compliance and economic substance. It’s important that markets worldwide have access to Bermuda’s leading expertise and capacity.”

Greg Wojciechowski, president and CEO of the Bermuda Stock Exchange (BSX), commented: “Removal from this list is a testament to Bermuda’s commitment to meet and exceed international standards of regulatory compliance. This development also serves to underscore the seriousness Bermuda places on being a strong partner in the global regulatory and commercial fabric. At the BSX, we share this view and work regularly with international regulators and market practitioners to ensure our operating platforms are in line with global standards. This is clearly evident in the fact the BSX is a full member of the World Federation of Exchanges and a member of the Board of Directors of that organisation.”