A damning report in the New York Times yesterday revealed the findings of a study from a Treasury Department economist that labels Bermuda as a "pure tax haven", saying profits posted by corporations from the Island bear "no relationship to economic activity".

But Finance Minister Paula Cox said such reports were not always based in reality, pointing out that anyone who does their research will see that Bermuda as an international business jurisdiction should not be labelled "a tax haven".

"Bermuda companies do have a presence here. It is relatively easy to rebut that kind of allegation."

Although the Island has been cited in recent years as a magnet for so-called corporate inverters ? with the issue becoming a heated debate from US legislators, including presidential hopeful Sen. John Kerry, and in the American media ? after several high-profile companies shifted their headquarters offshore to shave US tax bills, Ms Cox pointed out that there had been little to no corporate inversion activity on the Island for the last two years.

She added that no decision had been made on whether the Bermuda Government would respond to the article, but she did say that the Island would not be undertaking any "high-profile" lobbying at this time.

Ms Cox said in the run-up to the US elections in November efforts to lobby American legislators could be a fruitless exercise as their thoughts were "on the outcome of the election, not on any jurisdiction".

The New York Times report ? from David Cay Johnston, a journalist who has long reported on tax issues ? was in advance of the report's findings being published in journal Tax Notes.

The report "Data Shows Dramatic Shift of Profits to Tax Havens" comes from Martin Sullivan, who was said to be a specialist in international taxation with the US Government.

A copy of the report obtained by The Royal Gazette shows that, according to Mr. Sullivan's data, the profits reported by in Bermuda by "American multinational corporations" was $8.5 billion (which was said to mean an effective tax rate of three percent) compared to $25.2 billion in 2002.

Of that, it said American companies took $25.2 billion in profits in Bermuda in 2002, which came from total revenues of $34.3 billion.

Mr. Sullivan was contacted by e-mail yesterday to ask which companies had been included in his roundup of American companies reporting profits from Bermuda, but he had not responded by Press time last night.

The report only revealed that the findings had been based on 1999-2002 US Commerce Department data.

In total, the report said that American multinational corporations increased profits taken in countries with no taxes or low rates by 68 percent, while sharply reducing profits taken in countries where they engage in substantial business activity.

In particular, the report said the greatest growth in profits had come in "low-tax" Ireland and "no-tax" Bermuda, with profits doubling in the latter to $26.8 billion compared to $13.3 billion in 1999.

The report added: "Not surprisingly those two tax havens rank as the number one and number two locations in terms of profitability for US corporations operating abroad ? surpassing long-time leading investment partners like the UK and Canada."

The report went on to break out tax and profit levels for other domiciles it also labelled as "tax havens" including Luxembourg and Singapore, but said they were only "partial tax havens" because there was actual business taking place in those jurisdictions.

Although reporting an increase in profits generated in "tax havens", the report found that during the 2001-2002 period one country, the Cayman Islands, had seen profits from US subsidiaries drop from $5.8 billion in 2001 to $2.8 billion in 2002.

The report said there was no clear answer why this would have happened but speculated that it might be because of the "Enron debacle", which had numerous subsidiaries in the Caymans.

"US corporations believed the Cayman subsidiaries could present a public relations problem and therefore shifted profits to other tax havens". But it added that the Caymans had remained the "number one tax haven" for individual US investors.