Draft legislation to bring into law a corporate income tax on multinational coporations in Bermuda has been drawn up by the Government, reports the Bermuda Royal Gazette.
The draft version of the law, which is available here, was produced following responses to a second public consultation paper issued last month, and will “provide stakeholders with a comprehensive view of the proposed policy”.
Under the proposal, a levy of 15 per cent will be imposed on Bermuda businesses that are part of a multinational enterprise group with annual revenue of $814 million (about €750 million) or more.
Entities that are tax resident in Bermuda but also subject to tax in another jurisdiction will be subject to tax in Bermuda as Bermuda Constituent Entities, but will be allowed a foreign tax credit (FTC) for foreign taxes on income borne by the Entity.
A final version of the legislation is expected to be tabled in the House of Assembly next month, and the law could come into effect in January 2025.
The draft will be fine-tuned once the Government obtains feedback from a third public consultation paper, which was issued on Wednesday. Respondents have until November 30 to submit their comments.
In a statement, the Government said: “Certain aspects of the law will be clarified with guidance in 2023 and expanded in regulations intended to be published in 2024 and subsequent periods.
“Further amendments to the draft legislation may be made prior to being tabled in Parliament, including those to address feedback provided in response to this consultation.”
David Burt, the Premier and Minister of Finance, said the legislation will be “the most fundamental tax reform in Bermuda’s history”.
He said: “The Government places enormous importance on hearing from industry stakeholders and the public as we further develop this legislation.”
The Government received significant feedback from the previous consultations, which is shaping the proposal into a comprehensive and robust regime that the Government can implement.
“The introduction of the corporate income tax, which will only apply to large multinational corporations, in parallel with the work of our newly empanelled Tax Reform Commission, will allow the Government to fulfil its commitment to reduce the cost of living and doing business in Bermuda, benefiting both Bermuda’s residents and businesses.
“It also fulfils Bermuda’s commitment to participate in the global minimum tax initiative being implemented around the world.
“I look forward to the introduction of the new tax regime in Bermuda to both reinforce Bermuda’s reputation and maintain its competitiveness as a thriving international business hub.”
Since 2021, more than 140 countries, including Bermuda, have advanced towards alignment on international tax rules to create a level playing field.
The existing proposal would introduce a corporate income tax that would be a covered tax under the Organisation for Economic Co-operation and Development’s Globe rules.
The approach aims to minimise top-up taxes levied on Bermuda multinational enterprise groups in other jurisdictions where they operate.
The Government statement added that it is developing “a robust package of qualified refundable tax credits to maintain Bermuda’s attractiveness”.
It said: “Investments by corporations that meet the QRTC requirements will benefit Bermuda through development of the workforce, and investments in key areas targeted by the Government, including infrastructure, sustainability, innovation and housing.”
Source: Royal Gazette, taxnews.ey