Articles Tagged with Bermuda

tax evasionAccording to a list by Oxfam, a charitable organization that works to alleviate global poverty, Bermuda is the worst corporate tax haven in the world. Joining Bermuda on this list are fourteen other tax havens, which include the Cayman Islands and British Virgin Islands. But, what makes Bermuda stand out among the others noted on this list?

Creating The List

Oxfam did not take the creation of this list lightly. In order to determine the tax havens that belonged on the list, Oxfam carefully researched numerous factors, including the presence of exceptionally low or nonexistent corporate tax rates and unfair tax incentives. Oxfam also took into consideration the cooperation, or lack of cooperation, of these tax havens in regards to international regulations designed to combat tax evasion. During its extensive research, Oxfam found that Bermuda and other British territories were among the worst tax havens in the world. This is especially true when considering the United State’s use of these tax havens.

Bermuda-300x225Bermuda was placed on an updated blacklist as a non-cooperative tax jurisdiction by the European Union. The EU hopes that this will inspire Bermuda, as well the other captive domiciles on the list, to take the concept of tax evasion and avoidance seriously, and keep globe financial in order.

Bermuda is listed alongside Aruba, Barbados, Guam, Vanuatu, and the US Virgin Islands. The creation of the updated EU blacklist was a result of a European Commission directed research and investigation. This time there were 10 new countries added to the updated list, which means 15 total jurisdictions are currently on it.

The general criteria for the EU blacklist involves three things. The first was tax transparency, which makes all financial actions easily visible in order to avoid any chance of hidden corruption. The second is good governance that will assure all financial actions are being monitored efficiently by a selected party. The third is the rate of economic activity and the verification of that activity to assure that there is a real, steady, and prospering economic flow.

Google-tax-evasion-300x200Google, a renowned international technology company, was found to be using a Dutch shell company in order to reduce its foreign tax bill in 2017 by shifting $24 billion, 19.9 billion euros, of its revenue from royalties to Bermuda. The amount shifted in 2017 through the Netherlands was 4 billion euros more than what was documented in 2016. This information is according to documents filed at the Dutch Chamber of Commerce.

To further explain how this worked, Google used the subsidiary in the Netherlands, Google Netherlands Holdings BV, to shift their revenue made outside of the United States, their home country, to an affiliated base in Bermuda, which is essentially a known tax haven where companies are not required to pay an income tax. This base is called Google Ireland Holdings, and the tax strategy used here is known as the “Double Irish, Dutch Sandwich”. Surprisingly, this is a legal strategy which has allowed Google, who is owned by Alphabet, to avoid US income taxes and European withholding taxes, saving a large portion of their overseas profits.

When addressed through calls and emails about this shifting situation, Google stated that “We pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” and continued in detail to say “Google, like other multinational companies, pays the vast majority of its corporate income tax in its home country, and we have paid a global effective tax rate of 26% over the last 10 years.”

tax havenThe Sackler family empire comprises Purdue in America, Napp in Britain, and Mundipharma in Europe and Australasia. The companies have helped amass a £10 billion fortune, protected, in part, by the tax haven of Bermuda.

The Evening Standard in the UK released a report detailing that while their opioid painkillers are manufactured in Cambridge, the Caribbean is actually the heart of the Sacklers’ tax avoidance strategy. They report the Sackler family has allegedly diverted billions of pounds in profit to Bermuda to avoid paying millions in taxes that would have been due to the UK or Europe.

The Investigation into Opioid Companies