Bermuda ponders introducing corporation tax regime
The Government of Bermuda is pondering introducing corporation tax for multinationals., which could amount to a tax rate of between nine and 15 percent. Any such tax would not come into effect before 2025, but the idea of its introduction will cause a stir in the community.
The launch of a consultation on a corporate income tax was unveiled by Bermuda Premier David Burt this week. He was accompanied by leaders of Bermuda’s international business organisations, including the Association of Bermuda Insurers and Reinsurers and the Bermuda International Long Term Insurers and Reinsurers association.
A Government statement said that, if implemented, the corporate income tax would apply to Bermuda businesses that are part of multinational enterprise groups with annual revenues of €750 million ($820 million).
It is unclear just how many captives may fall into this category – or, indeed, how the rules might be applied to such entities.
The Government is also considering the possibility of restructuring the island’s existing tax regimes as a means of lowering the cost of living and doing business in Bermuda, the statement said.
The statement added: “Bermuda is considering a corporate income tax that would be taken into account in calculating the effective tax rate of Bermuda businesses under the Organization for Economic Cooperation and Development’s global minimum tax rules.
“These rules require companies in scope to pay a minimum tax of 15% in every jurisdiction in which they operate. The taxes paid under the proposed Bermuda corporate income tax regime would be those which would be payable to other jurisdictions under the global minimum tax framework.
“Any new corporate income tax adopted would also include certain tax credits which support Bermuda’s economic goals and maintains Bermuda’s global attractiveness.”
Bermuda Premier David Burt said: “Our approach is to use tax reform to bolster policy initiatives that will enhance Bermuda’s economic growth prospects.
“The Government continues to guide Bermuda to sustainable economic growth and development. We must attract and retain business in Bermuda, boost foreign investment, increase employment opportunities while expanding the workforce, and build our local economy to its fullest potential. These efforts will further our policies to make our island a better place to live and work.
“To assist in the appropriate policy development it is critical that organisations and individuals provide feedback on the matters addressed in the public consultation document.”
The statement noted that Bermuda has been committed to global compliance and transparency and is considered by the EU to be a fully cooperative tax jurisdiction. Bermuda currently has 41 bilateral Tax Information Exchange Agreements (TIEAs) and more than 125 multilateral treaty partners.
“The Government believes this proposed tax regime is supportive of Bermuda’s status as a leading international financial centre,” the statement said. “Bermuda plans to continue to invest in key policy initiatives including reduction in the cost of living, job creation, and other programs to stimulate the economy and enhance its attractiveness to MNEs.”
The first consultation period begins today and ends on September 8.