The Bermuda government has tabled legislation which will impose a 15 per cent tax on local businesses that are part of multinational groups with annual revenue of €750 million or more.
“The tabling of this Bill presents an opportunity for Bermuda to chart 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,” Premier David Burt said, as he introduced the new Corporate Income Tax Act 2023, telling legislators that “this landmark legislation represents a major milestone in the most fundamental tax reform in Bermuda’s modern history”.
The government of the British Overseas Territory said that the legislation also includes the establishment of a tax agency for the purposes of collecting and administering such corporate income tax regime.
Burt said that since 2015 the Organisation for Economic Co-operation and Development (OECD), in collaboration with the G20 industrialised countries, had been working to address the issue of profit shifting.
He said that in October 2021, a global agreement was reached to make material changes to the global tax system that would impose a minimum tax rate of 15 per cent on the corporate profits of large multinational enterprise groups to be applied in every jurisdiction in which they had a corporate footprint.
Premier Burt said that to address the issue, his administration established the international tax working group which “considered several options to address the challenges surrounding the global minimum tax”.
He said based on its recommendations, the government has “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.
“The government plans to introduce a 15 per cent corporate income statutory tax that will be applicable to Bermuda businesses that are part of a multinational group with annual revenue of €750 million or more.
“The corporate income tax will also fulfil Bermuda’s commitment to participate in the global minimum tax initiative being implemented around the world,” Burt said, adding that as part of the new tax regime, which is expected to come into force in January 2025, his administration is developing a package of qualified refundable tax credits aimed at supporting “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,” Burt said.
The government anticipates that as many as 10 per cent of international businesses registered in Bermuda could be affected by the new tax.
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