13 May 2019
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Bermuda will be removed from the European Union's blacklist of noncooperative tax jurisdictions next week, alongside Barbados and Aruba, a Bloomberg Law report said.
The report came only hours after Curtis Dickinson, the finance minister, told MPs he expected the island to be removed from the blacklist next Friday. Bermuda, Aruba and Barbados are to be removed from the EU blacklist because they have changed their corporate tax laws, the report said.
Dickinson told the House of Assembly that EU finance ministers will approve the removal at a meeting on May 17.
When Bermuda is removed from Annex 1, we will be placed in Annex 2 of the EU list. This is because of EU concerns regarding the need for a legislative framework for collective investment funds that meets their expectations"
The European Union's tax commissioner Pierre Moscovici had already hinted at Bermuda's removal from this list. Bermuda and nine other jurisdictions were placed on the blacklist in March, joining five countries already on the list.
A typographical error in economic substance regulation documents submitted by Bermuda to the EU earlier this year was given as the reason the island ended up on the list.
Annex 2, the greylist, where Bermuda will be placed, is not a list of countries but a list of criteria. Bermuda is expected to join the Bahamas, the British Virgin Islands and the Cayman Islands, which are grouped together for having tax regimes that facilitate offshore structures that generate profits without real economic activity.
Under the EU's fair corporate tax criteria, a company should have "economic substance" in the relevant territory, and must not be a letterbox firm that has been set up to take advantage of low or zero taxation.
Dickinson told MPs: "When Bermuda is removed from Annex 1, we will be placed in Annex 2 of the EU list. This is because of EU concerns regarding the need for a legislative framework for collective investment funds that meets their expectations."
He said the Government had promised to continue to co-operate with the EU over the adoption of a "proper legislative framework" for collective investment funds by the end of the year.
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 tax bills.
EU governments adopted a broadened blacklist of tax havens, adding 10 jurisdictions to the updated list: Bermuda, the Dutch Caribbean island of Aruba, Barbados, Belize, Fiji, the Marshall Islands, Oman, the United Arab Emirates, Vanuatu and Dominica.
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.
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