The head of Bermuda’s Corporate Income Tax Agency has played down fears that new American legislation could threaten much of the anticipated corporate income tax revenue.

Mervyn Skeet, chief executive of the agency, said the new CIT is a domestic income tax, not a Pillar Two, which the United States has in its sights.

“It is based on Pillar Two, but it is not a Pillar Two tax,” he said. “So we have to make sure that we remain a covered tax. So our relationship with the Organisation for Economic Co-operation and Development is very, very important. That is something we will be working on, very hard, over the coming months and years.”

Pillar Two refers to the OECD’s framework establishing a global minimum corporate tax rate of 15 per cent for multinational enterprises operating in different jurisdictions.

New rules set out in Section 899 of US president Donald Trump’s One Big Beautiful Bill are designed to target countries aligned with the OECD plan to derive additional tax from US multinational corporations.

The Bill was recently passed by the US House of Representatives and is now before the Senate.

Speaking at the Bermuda Captive Conference, Mr Skeet said: “Their focus is on the undertaxed payments rule.”

The rule operates as a backstop to the OECD’s income inclusion rule that ensures large multinational entities are subject to a global minimum tax rate.

“In Bermuda, we have introduced a domestic tax, which is the sovereign right of any jurisdiction, that the US themselves will respect,” Mr Skeet said.

Mr Skeet said it is important that the OECD recognises Bermuda as a sound and solid jurisdiction.

“We are building an agency that is respected around the world,” he said.

Last month, he was at the OECD’s Working Party 11 in Paris, set up to look at minimum taxes, Pillar Two in particular.

“We were there building out relationships with other jurisdictions, many of whom I have known from my previous experience,” Mr Skeet said.

Six months after being set up, the CITA has about ten staff members, and anticipates having 20 by the end of the year.

Mr Skeet said the CIT Act was pulled together very quickly at the end of 2023, in only five months.

“When you move that fast, there are bound to be things that need to be corrected and changed,” Mr Skeet said. “We have done a number of pieces of legislation already. This year, we introduced a penalties bill, which came out in March.”

Last month, the CITA released administrative regulations setting out exactly when the payment deadlines are and when registration has to take place.

The agency has also just released a consultation paper on technical amendments, which will correct some of the issues that were not quite right in the original Act in 2023.

“There is more legislation to come that will focus on various elements of legislation, working together with the Government over the coming period as well,” Mr Skeet said.

The agency is focused on building a tax administration platform that people can interact with digitally.

“We want it to be as frictionless as possible so that people can interact with us in a sensible way,” he said.