What's Happening?
Bermuda has introduced new tax credits that are expected to have a wider application than initially anticipated. According to guidance from the law firm Conyers, the Tax Credits Act 2025, recently tabled, outlines that these credits will be administered by the Corporate Income Tax Agency. The credits are designed to support substance-based, utilities infrastructure, and community development initiatives. Notably, eligibility for these credits is not contingent upon a corporate group being subject to Bermuda's new corporate income tax regime. This means that businesses meeting the criteria can offset payroll tax or potentially receive corporate income tax refunds. The Act is expected to pass by December 15, with the credits applicable from the first
fiscal year starting on or after January 1.
Why It's Important?
The introduction of these tax credits is significant as it provides financial incentives for businesses to invest in infrastructure and community development, potentially stimulating economic growth. By allowing companies to offset payroll taxes or receive refunds, the credits could reduce operational costs, encouraging more businesses to establish or expand their operations in Bermuda. This move may also enhance Bermuda's attractiveness as a business hub, particularly for companies looking to benefit from favorable tax conditions. The broader applicability of the credits could lead to increased investment in the island's economy, benefiting local communities and infrastructure development.
What's Next?
As the Tax Credits Act 2025 is expected to pass by mid-December, businesses in Bermuda will need to assess their eligibility for these credits and plan accordingly. Detailed regulations are anticipated in the new year, which will provide further clarity on how the credits can be utilized. Companies may need to consult with legal and financial advisors to understand the implications of the new tax credits on their operations. The Corporate Income Tax Agency will play a crucial role in administering these credits, and businesses will likely monitor any updates or changes to the regulations closely.
