The Bermuda government has announced that the House of Assembly will soon debate the Corporate Income Tax (CIT) Act 2023 which will primarily affect reinsurers and other Bermuda businesses that are part of Multinational Enterprise Groups (MNEs) with annual revenues exceeding €750 million.
The CIT Act 2023 is the culmination of multiple public consultations and direct engagement with industry stakeholders, facilitated by the government and its international tax advisers.
The move aligns with the OECD’s Pillar II rules, which were agreed upon by over 140 member countries. The rules mandate a 15% minimum tax rate for qualifying MNEs, applicable globally regardless of their domicile. Bermuda’s approach to the CIT is designed to balance international tax compliance with its economic policy, aiming to preserve the island’s appeal as a mid-shore hub for various MNEs, including those in the insurance, reinsurance, trusts, maritime, and other sectors.
A significant feature of Bermuda’s CIT is the introduction of Qualified Refundable Tax Credits (QRTCs), set to be developed in 2024. These credits are intended to incentivize companies to invest in critical areas for Bermuda’s residents, such as education, healthcare, housing, and workforce development projects. Bermuda is progressing with the implementation of its CIT, scheduled for January 1, 2025, and plans to continue monitoring global tax developments to ensure compliance with OECD standards.
John Huff, CEO of the Association of Bermuda Insurers & Reinsurers (ABIR), remarked on the collaborative effort between the Bermuda Government, industry, and tax experts in formulating this legislative framework.
“The next two phases of the CIT in 2024 will be critical to success, including reducing the cost of doing business by reviewing existing taxes and building ‘Qualified Refundable Tax Credits,’ along with establishing a Tax Administration framework to codify the Government’s commitment to fiscal responsibility,” Huff said.
Likewise, Christine Patton, the executive director of Bermuda International Long Term Insurers and Reinsurers (BILTIR), expressed appreciation for the inclusive approach taken in drafting the legislation.
“BILTIR has welcomed engagement on this important matter and appreciates the hard work which has gone into ensuring, as far as possible, that the legislation contemplates the range of complex and different businesses of its members. Going into 2024 BILTIR will continue to collaborate with the government and looks forward to a balanced approach to the management of new and existing taxes,” Patton said.
Elsewhere in Bermuda’s reinsurance sector, the ABIR has also announced that it is set to sponsor a free foundation course on Bermuda’s reinsurance and insurance industry for the fourth consecutive year.
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