Bermuda’s Premier Responds to U.S. Tax Bill

April 17, 2002

The ongoing proposals by several lawmakers to make U.S. companies, notably insurers, who relocate to Bermuda subject to U.S. taxes, has drawn a terse response from Jennifer Smith, the island’s premier.

“We don’t expect other countries to tell us how we should collect our tax, so I am not going to be in a position of commenting on how another country collects their tax,” Smith reportedly told the Royal Gazette, according to a report from Reuters News Service.

The issue of taxing U.S. companies, who relocate to Bermuda, has been around for the last couple of years. Some insurance companies, notably Hartford and Chubb, have given strong backing to the proposals.

Smith took a strong stand the Bermuda was not a tax haven, and that companies located there paid the same in taxes amount as all Bermuda-based companies.

There’s no indication that taxation is or isn’t a consideration for companies to set up headquarters in Bermuda, but a more likely reason for doing so is the rapidity with which companies can be formed and commence operations. Since Sept. 11 more than $12 billion in capital has flowed into Bermuda in order to fund new insurance companies, or bolster the capital of existing ones. At least 10 new companies were formed there in a matter of months, many with over a billion dollars in initial capital. It’s that kind of efficiency which is the island’s real attraction.

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