Bermuda considers corporate tax

Like the Cayman Islands, Bermuda has no corporation tax, a feature that has greatly contributed to that jurisdiction’s success globally as an attractive offshore jurisdiction, however that may soon change as the country considers implementing corporation tax. Bermuda’s Royal Gazette reports that the Bermudan government is moving towards the implementation of corporate income tax in what they say would be the biggest shake-up of the island’s tax system since the 1800s.

The report states that Bermuda is looking to align themselves with the OECD’s Inclusive Framework, which is seeking to reform international tax rules to ensure that large multinational enterprise groups pay a minimum level of corporate income tax, at a minimum rate of 15%, applying to multi-nationals with more than €750 million in total global revenues in at least two of the previous four accounting periods.

David Burt, Bermuda’s Premier and Minister of Finance, said Bermuda found itself at a pivotal point and must consider how they could adapt to these impending changes to global tax rules.

“Bermuda’s current consumption-based tax system was developed in the 1800s and reflected the expected scope and nature of expected economic and business activity, given our size and other factors,” he said. “Therefore, in response to the substantial changes in the global tax landscape, the Government is considering the implementation of a new corporate income tax regime as part of its work to address the Pillar 2 requirements agreed by the Inclusive Framework.”

The report said the Bermudan government anticipated that the proposed Bermuda corporate income tax legislation would be effective for tax years beginning on or after January 1, 2025. It is estimated that about 2,000 of the island’s 16,000 international companies would be affected.

Like Cayman, Bermuda’s tax system currently levies no corporate taxes on profits, income, dividends or capital gains.

The Bermudan government has issued a consultation paper regarding the proposed changes to the island’s tax structure, and which is a product of deliberations by the Bermudan government’s International Tax Working Group, which delivered its report last month. A consultation period, the first in a series of such periods, is open until 8th September.