Premier: tax overhaul may ease burden
A shake-up of the island’s tax system could result in a lower cost of living for residents, the Premier said yesterday.
David Burt told the House of Assembly that changes to the global rates regime were expected to pave the way for the reduction of levies that drive up the cost of doing business.
MPs also heard that a new Tax Reform Commission will be led by Darren Johnston, a veteran in the financial services sector.
Mr Burt said: “The new global tax regime may present an opportunity to increase government revenues.
“However, as I have said before, the Government’s policy aim is not to use these new global minimum tax revenues to significantly increase overall government revenue.
“This change in global taxation should allow for the reduction of existing taxes that, by their very nature, increase the cost of living and the cost of doing business.
“For example, additional revenues will likely allow for the reduction or possible elimination of some existing government taxes and customs duties.”
He urged members of the public and the business community to get involved in a process designed to deliver "the most fundamental tax reform in Bermuda’s modern history“.
The Premier added: “This historic opportunity for change will allow Bermuda to implement meaningful reforms that will significantly reduce the cost of living and the cost of doing business, leading to future economic prosperity and economic security for Bermuda.”
A global agreement reached in October 2021, in a deal led by the Organisation of Economic Co-operation and Development, included a 15 per cent minimum corporate tax rate for large multinational enterprises.
It was aimed, in part, at deterring multinationals from stashing profits in low-tax countries.
Mr Burt, who is also the Minister of Finance, said it was recognised that the global minimum tax requirement would primarily impact companies in the island’s international business sector.
He told the House: “Therefore, consistent with Bermuda’s approach to changes that affect the international business sector, it was determined that it would be prudent to get input from tax experts from industry and other sources.
“Thus, in January, the Government empanelled an International Tax Working Group consisting of lawyers, accountants and others with corporate tax expertise to examine the best way to implement the new global minimum tax in Bermuda.”
The Premier said: “This working group completed the first phase of their work in July of this year and provided their recommendations to the Government.
“Having assessed the input provided by the working group, in August, the Government of Bermuda issued a consultation paper on the proposed new corporate income tax regime and launched the initial consultation period for the proposed change.
“The feedback from that consultation has been very informative and has greatly assisted the Government in developing the corporate income tax proposal.
“It is now intended that a second, more comprehensive consultation paper will be issued in the next two weeks, allowing the Government to continue this critical work to meet the international commitment that Bermuda made in 2021.”
He explained: “The work of the new Tax Reform Commission is intricately linked with the work being done to develop the Bermuda corporate income tax regime.
“Therefore, while the consultation and development of the global minimum tax framework continues, the Government has also progressed in its work to empanel the new Tax Reform Commission.
“The goal of this new commission will be to review our existing system of domestic taxation to ensure it is in line with the requirements of the global minimum tax while also examining what other changes to our local taxes are needed to ensure that Bermuda’s economy remains competitive.”
Mr Burt said the “highly qualified and diverse”, seven-strong TRC team will include representatives from the Progressive Labour Party, the One Bermuda Alliance and the Bermuda Trade Union Congress.
They will be joined by a local business representative appointed by the Chamber of Commerce, an international business representative and one general member.
The Premier added: “I am pleased to advise honourable members that Mr Darren Johnston has agreed to chair this important commission.
“Although more information will be provided when the members of the commission are gazetted, Mr Johnston is the former CEO of PricewaterhouseCoopers, Caribbean Region, and is at present the chief operating officer of Orbis Investment Management Ltd.
“Mr Johnston is ably qualified to lead this important body, and I wish to thank him for agreeing to undertake a task that will have a significant impact on Bermuda’s future.”
Mr Burt highlighted that "the development of a new corporate income tax regime of the nature and scope being undertaken for Bermuda is exceptionally complex“.
He said: “Therefore, to ensure the required focus is adequately maintained, critical work necessary to develop key aspects of the framework will, at the appropriate stage, be advanced by the Tax Reform Commission.
“The Tax Reform Commission is expected to begin reviewing the domestic tax framework in light of the proposed corporate income tax in November 2023 with the aim of delivering its recommendations by mid-2024.”
• To read the Premier’s remarks in full, see “Related Media”