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Bermuda is a British Overseas Territory situated on the Bermuda archipelago in the North Atlantic Ocean and to the east of the United States. It is under the sovereignty of the UK responsible for defence and foreign relations. Bermuda has over 70,000 people, and its official language is English.
The Government of Bermuda is a parliamentary representative democratic dependency under the constitutional body. The Constitution of Bermuda provides for the self-government of the state. The authority is responsible for company registration and incorporation in Bermuda. The legislative framework is the Companies Act 1981.
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Bermuda is a well-known place for international businesses due to its favourable tax compliance services, policies, procedures, solid legal system and strategic location. There are several benefits of company registration in Bermuda, including:
However, tax compliance services in Bermuda can offer businesses a range of benefits, including tax efficiency, access to talent, a robust legal system and regulatory framework, a reputation for being a well-regulated financial centre, and flexibility in legal structures and tax planning.
In Bermuda, the tax compliance services where individuals in Bermuda don’t pay personal income tax, but the Government of Bermuda levies a Payroll Tax.
Payroll Tax follows the law and procedure under the Act 1995, and it applies to all employers, deemed employees, and self-employed persons on the remuneration paid in their business.
Taxable remuneration includes wages/salaries and benefits paid in cash or kind to employees, self-employed persons, and deemed employees due to services provided in Bermuda. Remuneration is capped at USD 900,000 per annum per person and is taxed in the Employer and Employee portions. Foreign contractors and subcontractors in Bermuda also pay Payroll Tax.
The following persons are exempted from Payroll Tax in Bermuda:
All residents and long-term tenants of Bermuda must pay Land Tax twice yearly. The following persons are required to pay the land tax:
The tax period is three calendar months with April, May and June. Every financial services tax provider chargeable to financial service tax is within 30 days after each tax period and after that, submit to the Office of the Tax Commissioner a tax return specifying the gross premiums, consolidated gross assets, or aggregated outgoing money volume and then pay the financial services tax due in respect of that tax period.
The financial service providers are also required to register the services with the Office of the Tax Commissioner within the following:
A financial services provider who fails, without reasonable excuse, to comply with registration is guilty of an offence and liable, on conviction by a court of summary jurisdiction, to a fine not exceeding USD 1,000.
Whether incorporated or not, any individual or company providing corporate services to an exempted undertaking in Bermuda must pay a 7% corporate services tax on the revenue earned. An exempted undertaking company is defined in the Companies Act 1981 and includes an exempted company, an exempted partnership company or a permit company.
Companies, individuals, partnerships, associations, or bodies of persons—incorporated or not- must pay the levied tax.
Corporate services include the following:
Businesses operating in Bermuda are required to pay Payroll Tax. And certain businesses pay additional taxes depending on the industry or service.
A betting duty of 20 % is charged on all bets made in Bermuda.
Any individual or company providing corporate services to an exempted company in Bermuda is required to pay a Corporate Services Tax.
All residents of Bermuda purchases from a local bank are subject to a 1.25% per cent tax.
A Hotel Occupancy Tax is 7.25% charged to all hotel owners in Bermuda.
All residents of Bermuda and long-term tenants must pay Land Tax twice yearly. The following persons are required to pay the land tax:
Taxes are charged to all passengers departing, arriving from, or to Bermuda on ships, aircraft, or private vessels.
Individuals or businesses must pay a duty to get certain official documents stamped.
Persons operating timeshare properties are subject to Timesharing Services Tax and Timesharing Occupancy Tax.
These providers can help businesses to prepare and file tax returns, manage payroll taxes and ensure compliance with other tax and regulatory requirements. They can also provide guidance and advice on tax planning and structuring and help businesses to optimise their tax position while ensuring compliance with local laws and regulations.
In conclusion, tax compliance services in Bermuda are essential for businesses operating in the jurisdiction. Bermuda offers a tax-efficient jurisdiction; businesses are subject to various tax and regulatory obligations. These include filing annual tax returns, paying payroll tax, complying with transfer pricing regulations, and complying with anti-money laundering regulations and Economic Substance Regulations.
Read our Article: Why Is Compliance Under FEMA Needed?
Minakshi Bindhani has completed LL.M. with a specialization in Criminal Law from Madhusudan Law University, Cuttack, Odisha. She is more inclined toward legal research and writing and have prior experience in Civil and Criminal litigation and content writing.
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