Legislation to introduce tax credits aimed at encouraging investment in Bermuda was approved in the House of Assembly.

David Burt, the Premier and Minister of Finance, said that the Tax Credits Act 2025 would introduce substance-based tax credits for the insurance sector along with utilities infrastructure credits and community benefit credits for charitable donations.

Mr Burt said the credits were among measures recommended by the bipartisan Tax Reform Commission and were intended to help create opportunities for Bermudians.

He told the House on Friday: “This Bill proposes to incentivise industries that are instrumental to the growth and development of the Bermuda economy to invest in their on-island operations, to encourage such investment when it results in increased employment in Bermuda, and greater job opportunities for Bermudians.”

Mr Burt said the credits will reward investments in domestic goods and services — benefiting the wider local economy — provide utility credits to reduce operating costs for qualifying businesses and recognise charitable contributions when they represent a meaningful benefit to the community.

He added: “This is a Bill for Bermudians, for Bermudian workers, Bermudian small businesses, a Bill for lower energy prices and a Bill for the charities in our country.”

Mr Burt said the credits came in the wake of the implementation of the corporate income tax in Bermuda.

He said that by introducing qualified refundable tax credits and other incentives, the Government hoped to encourage businesses to come to the island and invest in the local economy.

Mr Burt said that utilities were included in the legislation to ensure that companies are not worse off under the CIT regime than they would be under Pillar Two of the Organisation for Economic Co-operation and Development’s international tax framework.

While Mr Burt acknowledged that he could not say what the revenue from CIT would look like, the Government could not afford to wait years before introducing the tax credits.

He said: “We need to do this. It is something we committed to do in the very beginning.”

Douglas De Couto, the Shadow Minister of Finance, said that the One Bermuda Alliance supported the measures, describing the credits as playing a critical role for the island to remain competitive.

However, he said, not all companies that receive the credits will be paying corporate income tax, sparking the potential for “leakage” of the tax revenue.

Dr De Couto said: “There are insurance companies that can earn these credits that are not CIT taxpayers.

“There may be companies that are paying taxes that can’t get credits.”

He also questioned what measures will be in place to ensure that credits provided to utilities under the Act are passed on to the public.

Scott Pearman, the Deputy Leader of the Opposition, said that the tax credits were not like US tax reductions and are closer to industry-specific credits used in Europe to support certain sectors.

He said he was confident that the credits would help to encourage businesses to the island.

Mr Pearman added: “I think we will see that, and that’s no bad thing.

“Yet we must be cautious not to be a victim of our own success where we enable all of these companies to come to the island without any realistic possibility of them becoming a taxpayer.”

Jason Hayward, the Minister of Economy and Labour, said that the Progressive Labour Party’s approach to tax reform was aimed at supporting Bermudians, and the new Bill reflects that focus.

He said: “Tax credits are a fundamental piece of any income tax system.

“We significantly changed the way in which we approach taxes in Bermuda and we have made those changes for the betterment of the people of Bermuda.”

Mr Hayward added that the Bill links economic growth on the island to outcomes that directly benefit the community.

He said: “We should not only expect greater levels of economic activity, we should expect an expansion of companies seeking to ensure that their human capital is Bermuda-based.”