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David Cameron’s G8 agenda to close down cross-border tax evasion dealt blow by Bermuda prime minister Craig Cannonier

David Cameron’s ambitious G8 agenda to close down cross-border tax evasion has been dealt a blow after the premier of Bermuda said he will not sign up this weekend to an international agreement on tax information transfer.

The Bermudan prime minister had been asked to a meeting in London on Saturday to sign the OECD international agreement on tax information exchange – seen as the best way of developing co-operation between national tax authorities on companies and individuals seeking to avoid paying tax. More than 80 countries have signed the agreement.

Cameron knows he needs to be seen to be bringing his own “tax havens” in order before he can urge more action on other countries at the G8 summit in Northern Ireland next week.

Bermudan premier Craig Cannonier said the territories were ready to agree that wider sharing of information with international tax authorities was required in principle, but that Cameron’s aim of having them all commit to signing the convention at the weekend was unlikely to be achieved.

“My understanding is that we are not here to sign something, but simply to agree that everyone needs to get on par.”

He said the territories had held conference calls before their meeting with UK ministers in London this week and none had expressed a willingness to commit to signing the convention when they gather with Cameron at Downing Street on Saturday.

A spokesman for the Cayman Islands government said it had agreed on Friday to commit to an intention to sign the convention.

Charities are likely to push Cameron to make sure an agreement is signed, rather than the tax havens simply saying they are willing in principle to sign, subject to qualifications. They point out that Cameron will never have more leverage over the overseas territories than before the G8 summit chaired by the UK and he cannot allow the moment to pass with a simple indication of a willingness to sign.

A Downing Street spokeswoman declined to confirm Cannonier’s comment that Cameron had hoped to achieve agreement from the Territories this week on adopting the convention.

Cannonier in an interview with Reuters said Bermuda already met most of the standards in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, including having a register of beneficial owners of companies that other tax authorities can check.

However, he said the convention, drafted by the Organisation for Economic Co-operation and Development, a body of mainly rich nations, had potentially damaging elements for Bermuda.

“There’s some clauses in there that we need to look at, that may need to be adjusted, and … our finance ministry is going over it with a fine-tooth comb,” he said.

In May, the Territories, which also include the Cayman Islands, the British Virgin Islands and the Turks and Caicos Islands, agreed to share taxpayer information with the UK, France, Germany, Italy and Spain, but the convention will include many more countries and more information.

Bermuda has been accused of facilitating tax avoidance by large companies.

Multinationals typically park intellectual property (IP) in letter-box companies on the island. These then charge fat fees for the use of the IP to affiliates in countries where the groups have big sales, thereby channelling profits to the island, which charges no corporate income taxes.

Cannonier said it was unfair to blame Bermuda for this since it was “only one link in the chain” but added the country could tighten rules so that Bermuda-registered subsidiaries needed to have more economic substance on the island to enjoy its tax benefits.

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1. Bermuda refuses to sign up Cameron’s tax evasion deal

David Cameron’s G8 agenda to close down cross-border tax evasion dealt blow by Bermuda prime minister Craig Cannonier

David Cameron’s ambitious G8 agenda to close down cross-border tax evasion has been dealt a blow after the premier of Bermuda said he will not sign up this weekend to an international agreement on tax information transfer.

The Bermudan prime minister had been asked to a meeting in London on Saturday to sign the OECD international agreement on tax information exchange – seen as the best way of developing co-operation between national tax authorities on companies and individuals seeking to avoid paying tax. More than 80 countries have signed the agreement.

Cameron knows he needs to be seen to be bringing his own “tax havens” in order before he can urge more action on other countries at the G8 summit in Northern Ireland next week.

Bermudan Premier Craig Cannonier said the territories were ready to agree that wider sharing of information with international tax authorities was required in principle, but that Cameron’s aim of having them all commit to signing the convention at the weekend was unlikely to be achieved.

“My understanding is that we are not here to sign something, but simply to agree that everyone needs to get on par.”

He said the territories had held conference calls ahead of their meeting with UK ministers in London this week and none had expressed a willingness to commit to signing the convention when they gather with Cameron at Downing Street on Saturday.

A spokesman for the Cayman Islands government said it had agreed on Friday to commit to an intention to sign the convention.

Charities are likely to push Cameron to make sure an agreement is signed, rather than the tax havens simply say they are willing in principle to sign, subject to qualifications. They point out that Cameron will never have more leverage over the overseas territories than before the G8 summit chaired by the UK and he cannot allow the moment to pass with a simple indication of a willingness to sign.

A Downing Street spokeswoman declined to confirm Cannonier’s comment that Cameron had hoped to achieve agreement from the Territories this week on adopting the convention.

Cannonier in an interview with Reuters said Bermuda already met most of the standards in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, including having a register of beneficial owners of companies that other tax authorities can check.

However, he said the convention, drafted by the Organisation for Economic Co-operation and Development, a body of mainly rich nations, had potentially damaging elements for Bermuda.

“There’s some clauses in there that we need to look at, that may need to be adjusted, and … our finance ministry is going over it with a fine-tooth comb,” he said.

In May, the Territories, which also include the Cayman Islands, the British Virgin Islands and the Turks and Caicos Islands, agreed to share taxpayer information with the UK, France, Germany, Italy and Spain, but the convention will include many more countries and more information.

Bermuda has been accused of facilitating tax avoidance by large companies.

Multinationals typically park intellectual property (IP) in letter-box companies on the island. These then charge fat fees for the use of the IP to affiliates in countries where the groups have big sales, thereby channelling profits to the island, which charges no corporate income taxes.

Cannonier said it was unfair to blame Bermuda for this since it was “only one link in the chain” but added the country could tighten rules so that Bermuda-registered subsidiaries needed to have more economic substance on the island to enjoy its tax benefits.

Continue reading →

Related posts:

1. Bermuda refuses to sign up to Cameron’s tax evasion deal