David Burt, the Premier of Bermuda, has accepted responsibility for what appears to have been a case of human error when draft regulations were being edited that resulted in the country being blacklisted by the European Union.
In a statement to Bermuda’s House of Assembly, Burt blamed the EU’s action on a “minor technical omission in our regulations”. He said that one paragraph, 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”.
Burt, who was also Minister of Finance until late last year, stressed that the Bermuda government has spent almost two years attempting to address what he called “external threats to our jurisdictional operations in the area of financial services”. A big part of this was dealing with the EU Commission ‘s assessment of countries based on their tax transparency, good governance and real economic activity – economic substance.
“During my tenure as Minister of Finance and since then, we have been forced to sacrifice many domestic priorities to meet the requirements of, first, an assessment by the Caribbean Financial Action Task Force and most recently the EU’s requirements on Economic Substance,” he said.
He noted that the government has been tasked with considering and passing almost 50 pieces of legislation or other statutory instruments in support of both these efforts. “This has taxed the operations of several Ministries and Departments within Government and has incurred numerous late nights and long weekends of detailed drafting and policy review,” he said.
He went onto explain the detail behind this “minor technical omission” and the omission of the paragraph, which has led to Bermuda now being blacklisted.
He added: “This issue is one for which we must take responsibility and as the leader of this Government, in the legislature to whom the government I lead is collectively responsible, I have no difficulty in saying: ‘the buck stops at my desk’.”
But he stressed that be believes that Bermuda’s inclusion on the EU’s list of non-cooperative tax jurisdictions is only temporary. “Bermuda was compliant then and remains so now. This is a technical issue which has already been remedied,” he said.
He added that in some eight weeks Bermuda will have the opportunity to be removed from the List. “I have every expectation that this will be done as our existing laws meet the standard required by the EU. This is a view shared by Her Majesty’s Treasury in London who have also expressed to the Commission and publicly that they too expect Bermuda to be removed from this list based on our clear compliance with the required standard,” he said.
He added that he anticipates this will be “a short, but challenging period for Bermuda but I am confident that the bedrock of our decades-old reputation for sound regulation and conducting first rate business here will survive this latest threat”.
In the past year, the EU Commission assessed 92 countries on their tax transparency, good governance, real economic activity, and whether the country had a zero corporate tax rate.
The EU welcomed action taken by 60 countries to address and resolve the concerns raised adding that “over 100 harmful regimes were eliminated”, while the list was cited as having a positive influence on internationally agreed tax governance standards.
However, EU finance ministers said they were forced to blacklist 15 countries based on the Commission’s findings. These included American Samoa, Guam, Samoa, Trinidad and Tobago, and US Virgin Islands, which made no commitments to change since the first blacklist was published in 2017. Barbados, United Arab Emirates and Marshall Islands have also been added to the list for failing to follow up on pledges to change.
Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica were moved from the ‘grey list’ to the blacklist for not abiding by commitments they had made.
Changes to EU legislation mean EU funds cannot be channelled or transited through entities in countries on the blacklist.
Bermuda, blacklisted, human error, Governance standards, David Burt, Reinsurance, Insurance, Corporate Tax