By Emma Farge
HAMILTON (Reuters) – Bermuda’s Premier David Burt on Tuesday called the European Union’s decision to put the British overseas territory on a list of global tax havens “a setback” but said he was confident it would be reversed.
“This is a setback, but we are confident that Bermuda will soon be removed from this list of non-cooperative jurisdictions for tax purposes,” Burt said in a statement to local journalists.
The 28-nation EU set up the so-called blacklist in December 2017 after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills.
EU governments adopted a broadened blacklist of tax havens on Tuesday, adding 10 jurisdictions to the updated list. They are: Bermuda, the Dutch Caribbean island of Aruba, Barbados, Belize, Fiji, the Marshall Islands, Oman, the United Arab Emirates, Vanuatu and Dominica.
“The next meeting is in May and in the short interim period we will continue to make sure member states are clear that Bermuda is compliant and that our legislation is fully in force and is being implemented,” Burt said.
Blacklisted jurisdictions face reputational damage and stricter controls on their financial transactions with the EU, although no EU sanctions have yet been agreed by European states.
In an effort to meet an EU deadline, the self-governing island passed legislation in December that obliges companies domiciled in Bermuda to have a “substantial economic presence,” granting some firms a grace period for implementation.
While Britain had pushed other EU states not to include Bermuda on the list, it lifted its objections after the European Commission argued that the island has “been playing games” to dodge EU requirements, according to minutes of a meeting of EU envoys on the matter.
A spokeswoman for the Bermudan government did not immediately respond to that specific allegation.
Jurisdictions are added to the tax haven blacklist if they have shortfalls in their tax rules that could favor tax evasion in other states. They are removed from the blacklist if they commit to reforms by set deadlines.
Bermuda was required to change its tax rules by the end of February, but added new loopholes in revised legislation and did not provide a final text by the deadline, the Commission said according to the document.
The north Atlantic island, which is also a major reinsurance hub, has far fewer companies on its registry than other British territories like the Cayman Islands and British Virgin Islands which have more than 100,000 each.
But Bermuda made headlines in recent months when documents filed at the Dutch Chamber of Commerce revealed that Google (NASDAQ:GOOGL) moved 19.9 billion euros ($22.7 billion) through a Dutch shell company to Bermuda in 2017, as part of an arrangement that allows it to reduce its foreign tax bill.