Banks, insurance companies and money service businesses will face a new financial services tax, generating more than $11 million per year.

The biggest hit will be for money service businesses, which will have to pay 5 per cent on their aggregated incoming and outgoing transmission volume.

Banks will pay 0.02 per cent of assets, while local insurance companies will have a tax on gross premiums earned, excluding premiums from health insurance.

The rate of tax will be 2.5 per cent of non-health related gross premiums.

Finance minister Bob Richards said banks, insurance companies and healthcare would be exempt from the general services tax which will come into play next year.

He continued: “However, pursuant to Government’s objective of diversifying its tax base, we are introducing a new tax to be called the financial services tax which will be for banks, local insurance companies and money service businesses.

“Fees currently paid by banks and local insurance companies accrue directly to the Bermuda Monetary Authority to pay for supervision and regulation carried out by the BMA.

“The new FST is expected to generate about $11.4 million per year. The financial services tax will be introduced in April 2017.”

In a later press conference, Mr Richards was asked if the tax risked frightening businesses away.

Responding, he emphasised that the tax is “only on local companies; on banks and local insurance companies, not exempt companies”.

He added: “We are exempting any local insurance premiums that relate to health insurance.”