Bermuda Premier Michael Dunkley said the nation will be able to attract businesses even as U.S. President Donald Trump plans to reduce tax rates to help keep companies onshore.
“One of the things that I find very comforting about Bermuda is we’re paradise in the middle of the ocean,” Dunkley said [last week] at an event at Bloomberg headquarters in New York. He cited a strong regulatory environment and intellectual capital as competitive advantages for the island.
Bermuda has attracted hedge funds and family offices to its tax-friendly jurisdiction. Some of those investment firms formed reinsurance ventures, making the island a home base for companies that provide backstops to primary carriers for risks including hurricanes, terrorist attacks and car crashes. Those offshore vehicles have helped some firms reduce the amount they pay to the U.S. government by treating any gains as long-term profit.
“Without a doubt, the U.S. tax system is significantly uncompetitive relative to the rest of the world,” Siva Subramaniam, a tax partner at PricewaterhouseCoopers said at the event. He said many companies have been trying to “level the playing field.”
Trump is seeking to cut the corporate tax rate to 15 percent from 35 percent, while House Republicans have a plan to set it at 20 percent. Wealthy families are seeking a simplification of the tax code, according to Kristi Kuechler, president of the Family Office Exchange’s Private Investor Center.
In addition to tax rates, political events and regulatory changes in the U.S. and abroad have been spurring firms to consider moving their employees and headquarters. The U.K.’s decision to part from the European Union has spurred companies to make changes. XL Group Plc relocated to Bermuda amid rule changes in Europe, saying that the island’s regulators would be best situated to approve its internal capital models.
Dunkley said his nation would have to work closely with U.K. and EU leaders to make sure his constituents will have proper access to markets abroad.
“We want to protect our business base, we want to keep those markets open,” Dunkley said. “There’s a lot of work that has to be done.”
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