Bermuda Corporate Income Tax to come into force in January 2025

The Bermuda government has issued its third public consultation paper (CP3) in relation to a proposed corporate income tax in Bermuda which would be applicable to Bermuda businesses that are part of a Multinational Enterprise Group (MNE) with annual revenue of €750M or more. The CP3 includes an 80-page draft bill, the Corporate Income Tax Bill 2023 (Draft Bill), which is proposed to be tabled in the House of Assembly in December 2023. The Draft Bill is intended to come into force in its entirety in January 2025, providing MNEs time to make transitional adjustments. In addition to the Draft Bill, accompanying guidance will be issued before year-end. 

The Draft Bill includes a proposed a statutory income tax rate of 15% and includes a robust package of Qualified Refundable Tax Credits (QRTCs) to maintain Bermuda’s attractiveness. There was strong support for the QRTCs from the estimated 1,400 Bermuda-based international companies that may be affected by the proposed corporate income tax. The proposed corporate income tax exemplifies Bermuda’s continuing commitment to global compliance and transparency. 

In addition to the public consultations, the Bermuda government has formed a Tax Reform Commission that is tasked with advising the government of any measures to advance Bermuda’s system of taxation and revenue collection. In his Ministerial Statement, the Premier stated that he was “cautiously optimistic of the potential this material change in Bermuda’s approach to taxation may bring as it presents a real opportunity to significantly reduce the cost of living and the cost of doing business by eliminating existing taxes and Customs duties.”

There will be additional public consultation regarding administrative matters in relation to the Draft Bill, including structure, governance, operation, assessment and audit and administration of tax collection. Overall, the Bermuda government considers that the proposed corporate income tax regime will assist Bermuda in maintaining its international competitive position.

The deadline for comments on CP3 is 30 November 2023. Please contact Kennedys of you have any questions regarding the proposed corporation income tax or would like us to submit comments on your behalf. 

Further reading:

Public Consultation – Introduction of Corporate Tax in Bermuda (August 2023)

Second Public Consultation – Introduction of Corporate Tax in Bermuda (October 2023)