The Organisation for Economic Cooperation and Development's latest report on Bermuda signals that the Island is leaving offshore rival the Cayman Islands behind, according to Finance Minister Paula Cox.

Bermuda was one of just two countries — along with India — of the first eight to be assessed by the OECD adjudged to have "all elements in place" in its legal and regulatory infrastructure to achieve international tax transparency standards.

Cayman's legal structure was found to be lacking in being able to provide necessary accounting information and so missing an important element of the required framework.

The verdicts of the OECD Global Forum's Peer Review Group was delivered in Singapore on September 30.

"To think just for a second that this was a rubber stamp process would be misguided," Minister Cox told The Royal Gazette.

"Six other jurisdictions who completed the first phase of the peer review process were left behind, told that they did not meet the elements and, or could not pass on to phase two of the peer review process.

"Bermuda bid adieu to our competition. Cayman, for one, is back to the drawing board."

Ms Cox said she was now looking forward to next March, when Bermuda will host the OECD 2011 Global Forum meeting.

At that event, reviews of dozens more countries will be presented — including some of the major economic powers to cast blame the way of Bermuda and other offshore financial centres as the world financial system came close to collapse.

She suggested that there had been an element of hypocrisy from countries like the US and the UK — and now it would be their turn to come under the OECD microscope.

"We witnessed in the global financial crisis a hasty and provocative debate unfold as to who and what was to blame," Ms Cox said.

"Fingers were pointed and in almost all cases, countries looked offshore for scapegoats, meanwhile harbouring onshore the very same regimes they questioned, such as preferential and territorial tax systems.

"As Bermuda worked to dispel myths about the basis of its consumption based tax system, one that had been in place for over 100 years as an efficient and accomplished means of collecting tax revenue for a self-governing island, states such as Delaware, and cities such as London, were quietly honing their tax codes to compete as self-contained onshore financial centres.

"At the 2011 Global Forum, when a further 54 peer review reports will be submitted for adoption by the Global Forum, including the majority of OECD and G20 countries, these countries will undergo the same intense international scrutiny as Bermuda."

Last month's report will help Bermuda to shed the "tax haven" label, Ms Cox said.

"It was clear that the best and perhaps only way to finally and completely put to rest the erroneous title of 'tax haven' was to open up our jurisdiction to our peers for intense scrutiny of all aspects of our jurisdiction, from our anti-money laundering legislative to the application of our tax information exchange agreements, demonstrating once and for all that we comply with all aspects of the internationally agreed standard for transparency and exchange of information for tax purposes."

Although Bermuda passed the test and will now move on to phase two of the review process, the report did recommend some improvements needed to ensure effective exchange of tax information.

One concern was in the domestic law applied to the Island's TIEAs, the International Cooperation Act. The review found that this law includes two provisions that could allow the Minister of Finance to turn down a request for information under a TIEA — when the requesting party does not agree to pay the costs of providing the assistance, or when the Minister is not satisfied that the requesting party will keep the information confidential.

The report recommends that Bermuda should consider extending search and seizure powers for exchange of information requests made by all of Bermuda's tax information exchange agreement (TIEA) partners.

"We recognise that our recommendations must be balanced with the need to maintain Bermuda's attractiveness for business development, particularly in cases where new statutory obligations and more stringent obligations may be considered," she said.

The Ministry had prepared an analysis of a range of proposed actions Bermuda may take to meet the OECD recommendations, she added.

"We are currently embarking on a consultation process with industry which will ensure that all relevant departments and industry partners will have an opportunity to review the recommendations proposed by the OECD, and the proposed actions Bermuda may take to meet those recommendations.

"Any ensuing legislative changes will be guided by the outcome of the consultative process."

Bermuda is expected to provide follow-up reports at the 6th month and 12th month intervals detailing how we have implemented the PRG recommendations.

While most other countries in the world are focused on the first phase, Bermuda can now look ahead to phase two — to ensure that exchange of information is effective — to be carried out in the second half of 2012.

This will involve Bermuda's TIEA partners reporting on the quality of information exchange with Bermuda. An assessment team will also visit the Island for two or three days.

The PRG will then make a final decision on whether Bermuda continues to meet the international tax transparency standard and continues to warrant its place on the OECD's 'white list' of compliant countries.

At the 2011 Global Forum Bermuda will welcome heads of state, Ministers of Finance, the OECD Secretariat, and high-level government officials from all over the globe, as well as international media.

"It is equally important that Government maximise on opportunities to bring business to the Island, demonstrating with certainty to Bermudians just how relevant and important international business is to our economy," Ms Cox.

The influx of 200 high-level delegates and their families will be a boost for local business too and a chance for the Island to showcase itself as a business centre and a tourist destination.

"There is little doubt that if there is even one person on this Island who may today still maintain that international business has not touched their life, the 2011 Global Forum will be their rejoinder," Ms Cox added.