Bermuda’s newly enacted Tax Credits Act 2025 could reduce the corporate tax burden for island-based reinsurers, analysts have said.

ReinsuranceNews magazine cites the Jefferies Group observation that any benefit from the legislation launched on December 11, would not be felt until the fourth quarter of 2025.

The Bermuda Tax Credits Act 2025 introduced tax credits linked to on-island payroll, local spending and community donations.

The aim of the credits — managed by the Corporate Income Tax Agency is to encourage more corporate investment in the community.

The legislation runs alongside the Corporate Income Tax Act 2025, which imposes a 15 per cent tax on multinational enterprise groups.

The article explores Jefferies’ view that this could meaningfully reduce the burden of Bermuda’s corporate tax, particularly for insurance groups with large local operations.

Reinsurance News reported that before Bermuda introduced CIT, insurers who made losses did not create deferred tax assets because there was no tax against which those losses could be offset. The CIT changed that.

“Under the transitional rules, insurers were allowed to recognise DTAs not only on a go-forward basis, but also for net taxable losses incurred in the five fiscal years before implementation,” the article stated.

It added that considering the heavy natural catastrophe losses in recent years, many insurers built up substantial DTAs.

The new tax credits will materially reduce recurring tax expense, which in turn lengthens the time it would take for insurers to utilise the DTAs.