Bermuda: Legislation introducing corporate income tax signed into law
“Bermuda Corporate Income Tax Act 2023”
“Bermuda Corporate Income Tax Act 2023”
The “Bermuda Corporate Income Tax Act 2023” received governor’s assent and was posted to the official gazette on 27 December 2023. These were the final steps required to pass the legislation into law in Bermuda.
As previously reported in TaxNewsFlash:
- The corporate income tax will be determined based on a statutory tax rate of 15%, subject to reductions for foreign tax credits, and will be effective for fiscal years beginning on or after 1 January 2025.
- The corporate income tax will apply to each Bermuda tax resident entity and Bermuda permanent establishment (PE) that is a constituent entity of a multinational entity (MNE) group that has consolidated revenue of at least €750 million in at least two of the four preceding fiscal years, subject to certain exemptions.
- The determination of taxable income or loss is subject to various adjustments, including the economic transition adjustment, which are intended to support a fair and equitable transition into the Bermuda corporate income tax regime and mitigate potential distortions arising from the application of certain financial accounting standards.
The text [PDF 934 KB] of the legislation that has been signed into law reflects a number of revisions to the Illustrative Draft Legislation, which was previously circulated as part of the Third Public Consultation [PDF 3 MB], including significant changes to the creditable foreign tax allocation provisions of section 18 and the addition of section 21(6) to allow a temporary income exclusion for certain Bermuda constituent entities that are treated as controlled foreign corporations (CFCs) for U.S. federal income tax purposes.
Frequently asked questions
The government of Bermuda has posted the second version of a document [PDF 304 KB] entitled “Frequently Asked Questions for Guidance” that provides responses (including examples) to questions regarding the application of specific technical provisions, including (but not limited to) the tax loss carryforward deduction, changes in accounting principles, and the economic transition adjustment. The document has been updated once since its original issuance on 18 December 2023 and it is anticipated that further updates will follow in 2024.
Income tax elections form
The government of Bermuda has also posted Form CT-ELP [PDF 2.2 MB], Corporate Income Tax Elections, including form instructions [PDF 445 KB].
Form CT-ELP has been developed to allow elections to be made with respect to a Bermuda constituent entity in advance of filing a Bermuda corporate income tax return. However, as summarized in the “Frequently Asked Questions for Guidance” (see above), there is no requirement under the legislation to make elections in advance of filing a Bermuda corporate income tax return.
Elections that have been made by filing Form CT-ELP may be modified and/or reversed in the Bermuda corporate income tax return or by filing an amended Form CT-ELP.
For more information, contact a KPMG tax professional in Bermuda:
Sarah Robey | sarahrobey@kpmg.bm
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