Balancing act: Bermuda has always had to tread a thin line between transparency to satisfy regulators and discretion to attract investors. In France, pictured, they seem to feel we’ve got it right. *AFP photo
Balancing act: Bermuda has always had to tread a thin line between transparency to satisfy regulators and discretion to attract investors. In France, pictured, they seem to feel we’ve got it right. *AFP photo

Richard Murphy doesn’t care what the French say — Bermuda is still very much a tax haven as far as he’s concerned.

Mr Murphy, who is the director of the UK-based taxation think tank Tax Research LLP, says Bermuda has a “long way to go” before it cannot be considered a tax haven.

His comments come a week after France struck the island from its tax haven black list after an improved  exchange of information between the two countries.

Mr Murphy says the island’s environment of banking secrecy — specifically, rules blocking foreign tax authorities from information in some instances — means there is much room for improvement. He thinks Bermuda’s financial sector could be and should be more transparent.

Mr Murphy cites a report published by the Financial Secrecy Index in November that rips Bermuda for failing to require company accounts to be available on public record, failing to require company ownership details are publicly available online, failing to meet international anti-money laundering standards, and failing to require country-by-country financial reporting for all companies, among other things. (That report can be found here: http://www.financialsecrecyindex.com/PDF/Bermuda.pdf)

US agreement

Mr Murphy adds that the recent tax agreement reached between the US and Bermuda doesn’t go nearly far enough. The agreement calls for foreign financial institutions to identify and annually report key information about US account holders directly to the US Internal Revenue Service. 

Those institutions that don’t provide information will be subject to a 30 per cent withholding tax on certain American source payments like interest rates.

“I welcome it, but it is with the US alone,” Mr Murphy told the Bermuda Sun. “There are more about 200 countries in the world for which Bermuda can be a tax haven. 

“Progress with a big and powerful neighbour is welcome — but changes just one relationship, not them all, and as such, whilst not meaningless, is just a tiny step in the right direction and leaves all the fundamental reasons why Bermuda is a tax haven still in place.”

Earlier this month, Bermuda Minister of Finance Bob Richards said, after signing the new tax agreement with the US: “We have nothing to hide here. We’re all about transparency. That’s what this is all about, setting up a standardized structure.”

Mr Richards’ spokesman declined to comment on Mr Murphy’s assertions yesterday.