The majority of the leading captive domiciles have signed up to the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting and the two-pillar solution to address the tax challenges arising from the digitalisation of the economy, including a minimum global tax rate of 15%.
Bermuda, Cayman Islands, Guernsey, Luxembourg, Singapore, Isle of Man, British Virgin Islands, Malta and Hong Kong have all signed up to a new framework for international taxation arising from the OECD meeting of 1 July 2021. In total, 131 jurisdictions have signed the agreement. However, nine territories have yet to sign, including Ireland and Barbados.
The Government of Bermuda said: “Bermuda has been actively involved in ongoing discussions relating to this initiative, to present positions that reflect the national interest and that of our various stakeholders. As part of that approach, we recognised the need to join with other members of the inclusive framework to reach this position supported by a significant majority of the membership.”
Minister of finance Curtis Dickinson, said: “We fully intend to remain an active participant in the ongoing work of the inclusive framework to complete the development of an appropriate plan. We have noted areas of concern at a technical and practical level, which we look forward to working to resolve constructively in the months ahead.”
He added: “Financial services is a crucial area of focus for us, and the private sector, given our role as a global hub in key industries such as insurance/reinsurance. Businesses in this sector aid many of the world’s most vulnerable in adversity and provide climate risk insurance, which will be at the heart of making our planet sustainable. In relation to the former, Bermuda re/insurers have paid out more than a quarter of a trillion dollars over the past 20 years, in claims arising from both natural and manmade disasters in the US and EU alone.”
At the time of the initial G7 communique on taxation in June, Mr Dickinson said: “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 that lack the economies of scale and resources of larger jurisdictions.”