Associations Support Budget & Corporate Tax

Bermuda’s leading industry associations today expressed their support for the planned implementation of a Corporate Income Tax [CIT] on January 1, 2025 and the Government of Bermuda’s recently announced Budget.

Representatives from the Association of Bermuda Insurers and Reinsurers [ABIR], Association of Bermuda International Companies [ABIC], Bermuda Business Development Agency [BDA], Bermuda Chamber of Commerce and Bermuda International Long Term Insurers and Reinsurers [BILTIR] issued the following joint statement, which said, “Bermuda industries celebrate the Government’s presentation of the first balanced Budget in over 20 years and the continuing consultative and transparent implementation of the CIT.

“These major accomplishments support Bermuda’s brand as a compliant and transparent jurisdiction with a stable legal system that is more than 400 years old. That brand has drawn Multinational Enterprise Groups [MNEs] to the island for decades.

“It is why Bermuda is known as a leading international financial centre and a leader in financial services including insurance, reinsurance, captive insurance, insurance-linked securities, trusts and digital asset businesses. Government and industry worked in close collaboration to frame the CIT and, against the backdrop of the new OECD international tax framework, we see the introduction of the CIT as a sensible initiative that will maintain Bermuda’s competitiveness and global leadership position.”

David Hart, CEO, Bermuda Business Development Agency [BDA] said, “The BDA shares the sentiments expressed in the budget speech regarding a commitment to economic development, especially the importance of attracting foreign direct investment and creating employment opportunities in Bermuda.

“The positive news of a balanced budget sends a strong signal to overseas markets that Bermuda remains a premier domicile in which to invest. We also remain optimistic that Bermuda’s proposed corporate income tax, when implemented, will make Bermuda an even more attractive place to do business.”

Danielle Riviere, Bermuda Chamber of Commerce CEO said, “The Bermuda Chamber of Commerce commends the Bermuda Government’s landmark achievement towards a balanced budget and the planned 2025 introduction of the Corporate Income Tax [CIT]. The implementation of the CIT reflects our island’s agility and visionary planning, securing our position as a favourable location for multinational corporations in compliance with the OECD’s latest tax guidelines. We commend the collaborative spirit shown by the Government and industry peers in developing a tax framework aimed at strengthening Bermuda’s economic position and attracting further investments.”

John M. Huff, ABIR CEO said, “ABIR and its member companies applaud the Bermuda government for achieving a balanced budget and protecting future generations from additional government debt. ABIR will continue to provide technical assistance to the government and further collaborate on the implementation of the Bermuda Corporate Income Tax [CIT] Act of 2023 helping to establish job-creating ‘Qualified Refundable Tax Credits,’ efficient tax administration and fiscally responsible guardrails for expected, additional government revenue.”

Christine Patton, BILTIR Executive Director said, “BILTIR believes that the Bermuda Government’s introduction of the Corporate Income Tax is a reasonable response to the challenges of the OECD-sponsored new international tax framework, because it will ensure that taxes on Bermuda income stay in Bermuda, thereby allowing Bermuda to take aim at the cost of living and doing business in Bermuda.”

Patrick Tannock, Chairman of the Association of Bermuda International Companies [ABIC] and CEO of AXA XL Insurance in Bermuda said, “The ABIC Board and membership commend the Government on producing a balanced budget at a pivotal point on Bermuda’s path to economic renewal and future prosperity.

“ABIC is also encouraged by the Government’s willingness to collaborate and consult on the ramifications of the pending CIT, and we are confident that the Tax Reform Commission is taking a holistic look at Bermuda’s tax structure to ensure that the jurisdiction is as internationally cost competitive as possible.

“We look forward to continuing to work with Government and all stakeholders on this important national issue. The implications of the global minimum tax represent an inflection point where the need to work together has never been more critical for Bermuda to remain a domicile of choice.”

Background on the CIT

The spokesperson said, “A few years ago, the Organization for Economic Cooperation and Development’s decision to introduce a Global Minimum Tax [“GMT”] of 15% for MNEs around the globe changed our world. Bermuda had to decide whether to keep pace with the rest of the world, or lose its positioning as a respected quality jurisdiction committed to tax transparency and cooperation. The Government responded by forming the International Tax Working Group [“ITWG”], bringing together industry experts in tax, finance, accounting, law and insurance to study the impact of the GMT to determine our best course of action. The group proposed the introduction of a CIT, a first for Bermuda, with the intent of ensuring that taxes on profits generated by “in-scope” MNEs in Bermuda stay in Bermuda. After listening carefully to the recommendations from industry and receiving constructive and comprehensive feedback from three public consultations, the Government passed Corporate Income Tax Legislation to come into effect on January 1, 2025.

“Bermuda’s industries support the Government’s empowerment of the Tax Reform Commission to make recommendations for adjustments to the current tax regime in light of the introduction of the CIT, including proposing reductions to other taxes and fees to lower the cost of living and doing business in Bermuda. The Commission will also make recommendations for granting appropriate tax credits to MNEs for investments they make in Bermuda. The aim is for these tax credits, which are currently in development, to be recognized as Qualified Refundable Tax Credits under the GMT, providing benefits to Bermuda and to industry. Such tax credits will ensure that taxes on profits generated by “in-scope” MNEs in Bermuda are competitive with what they would pay in other jurisdictions. A thoughtful program of tax credits will maintain Bermuda’s leadership in global tax compliance while lowering the cost of living and doing business in Bermuda in the future.

“Since announcing the CIT, Bermuda has remained competitive and a leader in retaining and attracting business as a premier international business jurisdiction. In the fourth quarter of last year which included two public consultations and the passage of the CIT, 232 companies registered in Bermuda. This is a 75% increase over the number of corporate registrations during the same period in 2022.

Additional Details on the CIT

“The CIT, which imposes a statutory tax rate of 15%, approximating the GMT, will apply to Bermuda businesses that are part of an MNE with annual revenue of €750 million or more, roughly 10% of Bermuda’s businesses. Local Bermuda businesses will not be impacted by the CIT. The new tax legislation will go into effect on January 1, 2025, allowing MNEs sufficient time to transition to the new tax regime. The anticipated revenue from the CIT could be used to support such initiatives as reducing health insurance costs, reducing or eliminating customs duties, reducing existing direct costs, and improving infrastructure, health care, and capital investment.

“For more information visit: https://www.gov.bm/CIT.”

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