Bermuda has had a history of supporting quality business, while adhering to fiscally responsible policies through a balanced long-term growth agenda. Given the importance of cross-border trade to the Bermuda economy, Bermuda authorities have always been committed to ongoing compliance with international standards for financial regulation, transparency, and international cooperation. We have been subject to independent, international scrutiny by various global standard-setting bodies, which confirms this position.
We have been actively involved in international discussions on regulatory and tax matters and have continued to liaise with our key trading partners, including the UK, the USA and the EU, on financial and other relevant matters. We are fully engaged with the current multilateral work of the OECD Inclusive Framework Committee on Base Erosion and Profit Shifting (BEPS) to address international concerns around base erosion and profit shifting.
In relation to the communique issued this weekend by the G7 Finance Ministers, we support the overall objectives outlined in that comprehensive document. We laud efforts to effectively address climate change, combat financial crime, create greater financial stability and help vulnerable economies. With regard to the proposals presented on tax, it is critical that any agreed framework to establish a global minimum tax, must respect a country’s right to sovereignty in relation to its tax system. Any outcome that impacts this right is outside the original agreed aims of the OECD BEPS initiative. It also does not give appropriate consideration to the rights and needs of those jurisdictions which lack the economies of scale and resources of larger jurisdictions.
Bermuda’s consumption-based tax regime has been in place for almost two centuries. It is a system shaped for efficiency in a very small and undiversified economy, particularly considering the vagaries of corporate profits in the financial services sector. Our existing system yields a ratio of total government receipts to GDP of approximately 16% on average, which we deem appropriate for an economy such as ours.
As these matters are progressed, conclusions reached must incorporate principles of fairness and right to sovereignty in this important area. There should also be appropriate recognition of the considerable work done, by countries such as Bermuda, to be effective partners in promoting and implementing robust standards for strong and robust regulation, transparency and international cooperation.