Though the controversial Republican tax bill has been slammed as a giveaway to the wealthy, it currently includes some provisions to close loopholes that help corporations shift money to offshore tax havens. Those provisions, however, may not survive the final legislative wrangling. Justice Department documents reviewed by International Business Times show that lobbyists for the tax havens Bermuda and the Cayman Islands are pressing lawmakers to restore the loopholes that, critics say, enrich offshore insurance companies and American hedge fund moguls.

Bermuda’s lobbying firm, theGroup, last week distributed talking points on Capitol Hill proposing language to preserve a lucrative Bermuda tax loophole, arguing that the shifts of money to reinsurers in Bermuda “do not represent a permanent move of capital offshore and should not be treated in the same manner” as other companies shifting money overseas. The lobbyists also promoted a letter from the trade organization Risk and Insurance Management Society to Republican Sen. Tim Scott, which argues that the congressional proposals could “serve to limit U.S. insurance capacity and drive up the cost of insurance.”

At issue are Bermuda-based companies which ostensibly provide insurance to insurers. The current tax code allows U.S.-based insurance companies to shift money to offshore reinsurers, which can allow them to defer or avoid paying taxes on later investment gains. In recent years, the reinsurance maneuver has been used by hedge fund managers to effectively avoid income taxes on the investment fees they earn. Both Democratic lawmakers and conservative groups have decried the practice; a 2014 Joint Committee on Taxation report said “the establishment of offshore businesses that reinsure risks and that invest in U.S. hedge funds has been characterized as creating the potential for tax avoidance.”

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To generally address the shift of corporate gains offshore, Republican House and Senate lawmakers included provisions in their tax bill that tax the payments made by U.S. based companies to foreign affiliates — and because the new provisions do not exempt reinsurance, they could could shut down the Bermuda loophole. The lobbyists for Bermuda's government are now trying to make sure that any new tax law preserves the existing preferences for offshore reinsurance companies.

The Senate passed its version of the tax cut bill -- with the new levies on payments to offshore entites -- late Friday and the legislation now moves to a conference committee where its details will be worked out. Lobbyists from theGroup donated more than $90,000 to federal lawmakers during the last election, according to data compiled by the campaign finance watchdog group MapLight. That included $12,000 to Senate Minority Leader Chuck Schumer and $5,000 to Republican Sen. Bill Cassidy, who is on the Senate’s tax-writing committee.

Bermuda hired theGroup on November 2nd -- just as the Paradise Papers scandal was breaking -- for $20,000 per month for a three-month contract focused on lobbying the U.S. Government and the U.S. financial services industry, according to records reviewed by IBT. The lobbyists assigned to Bermuda are Darrel Thompson, a former staffer for former Senate Majority Leader Harry Reid and chief of staff for Barack Obama’s Senate campaign, and Art Collins, a former insurance regulator and legislative director for the Florida Department of Insurance.

At the same time Bermuda has worked to shape the tax legislation, federal records show the Cayman Islands hired the powerful law firm Baker Botts to influence lawmakers on the general issue of offshore tax policy. Cayman will be paying the firm $12,500 per month starting in 2018, but is currently paying the firm $950-per-hour to prepare messaging and policy documents.

In a letter of talking points sent to members of Congress, Baker Botts wrote: “Members of Congress often call Cayman a tax haven. Cayman is actually a tax neutral financial services center with stable political and judicial institutions and prominent professional services firms.”

On the topic of minimum taxes, the letter stated: “Imposing a current minimum tax on top of U.S. taxes will merely make U.S. goods more expensive worldwide, and thus less competitive in international markets.”