CIT will mean companies will have to run ‘super efficiently’
International businesses in Bermuda would have to rely on efficiency and flexibility to maintain a competitive advantage if Donald Trump, who has pledged to lower corporate income tax, wins the US presidential election.
The 15 per cent corporate income tax on multinational companies with annual revenues of €750 million (about $827 million) will kick in next year.
However, Mr Trump, the Republican presidential nominee, has proposed cutting the US 21 per cent corporate tax rate to 15 per cent, although companies that “outsource, offshore or replace American workers” would not be eligible.
According to Dany Bernier, who was speaking at the cio investment club’s first Bermuda CIO reinsurance round table, the CIT will mean “companies will have to run super efficiently”.
“It’s easy for capital to change location, and there are emerging markets such as Dubai that will welcome capital,” said the group deputy CIO at Lancashire Insurance Group.
However, he added: “A bigger story we need to think about is the eventuality that Trump wins the election and is empowered to bring the US corporate tax rate down to 15 per cent.
“So where is the tax advantage now?
“Then in Bermuda, we will have to rely on efficiency and flexibility to have a competitive advantage.”
Tom Duggan, CIO Bermuda and US at Catalina Re, said despite the CIT, Bermuda’s prospects remained strong.
“From a corporate perspective, tax is just one element of myriad advantages of doing business here, including the established regulator and a solid rule of law, quality of life for employees, etc.
“My personal view is that the CIT will have some impact, but not on Bermuda’s overall attractiveness as a place to do business, or as a place to live.”
Aileen Mathieson, group CIO, Aspen, said that transition measures in CIT rules enabled insurers to soften the impact by establishing deferred tax assets that they can use to reduce their tax bill over the next ten years.
She said that most notably, Athene Holding had set aside approximately $1.5 billion in a deferred tax asset, and for Arch Capital Group it was $1.2 billion.
The cio investment club brought together some of the industry’s leading investment management professionals for a round table to hear their thoughts on the market environment, risk and opportunities, regulation and Bermuda’s prospects.
The panellists also included Jamie Steeves, deputy CIO, Axis Capital; Amar Singh, investment director, Portfolio Strategy, L&G Re; and, Jeffrey Morash, CIO, North End Re.
The roundtable was moderated by Jonathan Kent, of JDK Media.
They produced a White Paper that can be seen under Related Media.
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