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Corporate tax rate could be set between 9% and 15%

Bermuda’s corporate income tax rate for the targeted multinational companies is likely to be somewhere between 9 and 15 per cent, a consultation document suggests.

The proposed corporate income tax would apply to Bermuda businesses that are part of multinational enterprise groups with annual revenue of at least €750 million.

The proposed corporate tax would be expected to be effective for 2025.

The consultation document, Introduction of Corporate Income Tax in Bermuda, published on Tuesday, is available for public feedback until September 8.

The document states the Bermuda corporate income tax rate would be established at a level which is unlikely to result in an overall effective tax rate on profits earned in Bermuda in excess of 15 per cent.

The document notes: “The Government of Bermuda will conduct further analysis to determine the appropriate corporate income tax rate, but currently believes a rate within a range of 9 per cent to 15 per cent may be appropriate to address the policy considerations previously noted.

“The Bermuda corporate income tax would be reduced by foreign taxes to mitigate the potential for double taxation of profits earned in Bermuda (eg, to the extent that profits earned in Bermuda are subject to both foreign taxes and Bermuda corporate income taxes).

• The types of non-Bermuda taxes that would be creditable foreign taxes include income taxes (federal, state and local), withholding taxes, US federal excise tax on insurance and reinsurance premiums, and other taxes collected in lieu of an income tax.

• A foreign tax credit may be permitted for foreign income taxes imposed on a direct or indirect parent of a tax resident entity under another jurisdiction’s controlled foreign corporation regime, equal to the CFC taxes paid or accrued by the direct or indirect parent on Bermuda profits.

• The allowable credit would be expected to equal the amount of the current and deferred taxes of each tax resident entity or Bermuda parent entity included in the preparation of the consolidated financial statements of the ultimate parent entity consistent with the requirements above.

This first public consultation is intended to be the first of a series, with two consultations this year.

The document states: “For this first public consultation we are inviting replies from interested parties to any or all the below high-level questions with a view to gaining an understanding of the initial responses to the proposals.

“Respondents are also invited to respond on issues not covered in this paper but which may otherwise be important to them, noting that a more detailed second public consultation will be held later in the year to cover the specific aspects of the proposals such as how taxable income and creditable taxes are computed, to address detailed questions as to scope, and to address transitional matters.”

Consultation paper responses should be submitted by e-mail to: cjanderson@gov.bm. Respondents should include “Introduction of Corporate Income Tax in Bermuda” in the subject box.

• For the public consultation document, Introduction of Corporate Income Tax in Bermuda, see “Related Media”

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Published August 08, 2023 at 6:42 pm (Updated August 08, 2023 at 7:23 pm)

Corporate tax rate could be set between 9% and 15%

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