Corporation tax to be debated by MPs

The Bermuda Government has tabled the Corporate Income Tax Act, which will see multinational companies with more than €750 million in annual revenue pay a 15% tax on their profits.  

The tax is scheduled to take effect in 2025. 

“This landmark legislation represents a major milestone in the most fundamental tax reform in Bermuda’s modern history,” Premier David Burt said on Friday. 

“The tabling of this Bill presents an opportunity for Bermuda to charter a path towards meaningful tax reform that will significantly reduce the cost of living and the cost of doing business in this country, leading to further economic prosperity and economic stability.”

Burt said the tax came about as a result of a 2021 global agreement to impose a minimum tax rate of 15% on the corporate profits of large multinational enterprise groups to be applied in every jurisdiction in which they had a corporate footprint, commonly referred to as the Global Minimum Tax.

He said the Bermuda Government empanelled an international tax working group consisting of lawyers, accountants, and other corporate tax experts to review the Global Minimum Tax in detail in January 2023, and to recommend an efficient framework to uphold Bermuda’s value proposition and continued compliance with existing commitments to the OECD and EU.

“The working group considered several options to address the challenges surrounding the Global Minimum Tax and after much consultation the Government, based off the recommendation of the Working Group, decided to introduce a Corporate Income Tax regime as it provides the most flexibility and allows for the introduction of policy driven design features, which are common in many other countries, that will benefit Bermuda,” Burt said. 

“It is worth noting that such a substantial tax rule change to the global tax system initially placed Bermuda in a challenging position, but the tabling of this Bill gives me tremendous pride because, in true Bermuda fashion, we adapted to these significant changes and identified ways to maximise the benefit.”

The corporate income tax will be a covered tax under the OECD’s GMT eligibility rules, Burt said, adding: “This approach aims to minimise top-up taxes levied on Bermuda Multinational Enterprises in other jurisdictions where they operate.”

Burt noted that the Government is developing a robust package of Qualified Refundable Tax Credits  aimed to support Bermuda's economic goals and maintain our global attractiveness as a jurisdiction. Investments by corporations that meet the QRTC requirements will benefit Bermuda in key areas including infrastructure, education, healthcare, innovation, and housing.

“In parallel, the Tax Reform Commission will analyse Bermuda's existing tax regimes and consider potential restructuring alternatives with the goal of reducing the cost of living and doing business on the island,” he said. “Thus, it is expected that there will be more legislation related to this important work presented to this Legislature in the upcoming year.”