The Government of Bermuda has announced a second public consultation regarding the potential introduction of a corporate income tax (CIT) applicable to Bermuda businesses within the scope of the Organization for Economic Cooperation and Development’s (OECD) global minimum tax rules (GloBE Rules). This includes Bermuda Tax Resident Entities and Bermuda Permanent Establishments that are part of a Multinational Enterprise Group (MNE) with consolidated revenue of €750 million or more in at least two of the previous four fiscal years, in alignment with GloBE Rules.
Following feedback from the first consultation, which concluded on September 8, 2023, the design of the proposed CIT regime has been influenced by several factors. Bermuda aims for its CIT to be recognised as a Covered Tax under GloBE rules, minimising additional expenses for MNEs in the form of Top-Up taxes collected in other jurisdictions through the Income Inclusion Rule (IIR) or Undertaxed Payment Rule (UTPR), while recognising Creditable Foreign Taxes. Bermuda is proposing an effective rate of 15% for the profits of covered MNEs.
The CIT is planned to become effective in 2025, allowing MNEs the necessary time to adjust their systems as they transition to paying corporate income tax in Bermuda.
The government also intends to introduce details of a Qualified Refundable Tax Credit (QRTC) program in 2024, effective in 2025. QRTCs are expected to support job retention and growth in Bermuda, as well as investments in career training, infrastructure, sustainability, and other initiatives to make Bermuda an attractive mid-shore jurisdiction for living and working.
Bermuda’s Tax Reform Commission will also be convened to explore ways to reduce the cost of living and doing business in Bermuda alongside the refinement of the CIT regime. Investments in initiatives to foster job creation and accelerate economic development remain a priority to attract investments from MNEs.
Premier and Finance Minister David Burt expressed gratitude for the feedback received during the first consultation period and confidence in the new CIT regime’s alignment with international tax rules. He emphasised the positive impact it could have on Bermuda’s future, including easing the burden on citizens, maintaining competitiveness for international business investments, and fostering global compliance leadership in tax policy.
The second consultation period will commence on October 5, 2023, with all comments to be submitted by the deadline of October 30, 2023.