8 November 2023news

Bermuda Government announces plans for corporate income tax bill

The Bermuda Government is planning to introduce a corporate income tax bill to implement the global minimum tax agreement within the next nine months.

The announcement, made in the annual Throne Speech by the Governor, comes after Government recently launched its second round of consultation on the measure, which was described as “the most fundamental tax reform in Bermuda’s history”.

The move also follows consultation with the re/insurance sector and the broader business sector. Re/insurers are likely to form the largest segment of international companies with more than €750 million in annual revenues who would be liable to pay the tax, which is likely to be set at 15% of annual net income.

The Government also announced that the Bermuda Business Development Agency (BDA) will be restructured from a marketing/ development agency to an investment promotion agency.

On the corporate income tax, the Government said: “In October 2021 a global agreement was reached to make material changes to the global tax system. It was agreed that a minimum tax would be imposed on large multinational enterprises with over 750 million euros of global revenue.

“Almost 150 countries agreed a framework that would subject such entities to a minimum 15% effective tax rate, applied to the profits in every jurisdiction in which they have a corporate footprint.

“After two successful rounds of consultation with the public and particularly with affected industry stakeholders, during this Session the Legislature will be invited to consider an historic Corporate Income Tax Bill to implement the Global Minimum Tax agreement in Bermuda.”

The Throne Speech, which was read by the Governor, Rena Lalgie, said work would also be done developing refundable tax credits which would provide incentives for international companies in Bermuda to invest in projects that would boost the economy and infrastructure. These amendments would follow passage of the principle Act.

In the past, the Government has said the tax credits could be used to encourage training and employment of Bermudians.