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- BERMUDA
RESIDENCE & LIABILITY TAXATION
- BERMUDA PAYROLL TAXES
- BERMUDA MISCELLANEOUS TAXES
& DUTIES
- BERMUDA CUSTOM DUTIES
In
Bermuda there is no income tax, capital gains
tax, purchase or sales tax, VAT or capital transfer
tax. Employees pay some fairly minor taxes, and
there are taxes on property; customs duties can
be significant for immigrants. There is 'stamp
duty' on Bermudan assets at death.
Bermuda Residence
and Liability for Taxation
The Bermudan payroll tax and social contributions
apply to persons 'employed in Bermuda'. For a
non-Bermudian this is equivalent to 'having a
work permit' since it is illegal to work in Bermuda
without one. Other Bermudan taxes or duties are
related to events, rather than residence status.
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Bermuda
Payroll Taxes
Under
the Payroll Tax Act 1995 and later legislation,
Bermudan employers have traditionally
had to pay a tax of 12.75% of payroll.
Employers
have also been able to recover 4.5%
of the payroll tax from employees (on
their actual salary, not the notional
amount).
In
the 2004/2005 financial year, the 12.75%
rate was raised to 13.5% for firms with
payrolls amounting to more than BMD200,000
per year. In the 2008/9 budget, the
standard rate of payroll tax was raised
again, by 0.5% to 14%, for businesses
with annual payrolls of BMD1 million
or more. The payroll tax salary cap,
which was raised from BMD225,000 to
BMD235,000 in 2004/5, and to BMD350,000
in 2007/8, was left on hold in the 2008/9
budget.
In
the February budget for 2005/2006, Bermuda’s
Minister of Finance Paula Cox announced
a restructuring of the payroll tax system
in an attempt to assist small and medium-sized
enterprises and attract new business
to the jurisdiction.
Under
the change, firms will face new tiered
rates as follows:
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13.50%
applicable to: Taxpayers with an annual
payroll greater than $1,000,000 and
exempt undertakings.
-
12.75%
applicable to: Taxpayers with an annual
payroll greater than $500,000 and up
to $1,000,000.
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10.75%
applicable to: Taxpayers with an annual
payroll between $200,000 and $500,000.
-
9.75%
applicable to: Taxpayers operating an
hotel or restaurant with an annual payroll
of $200,000 or greater.
-
7.75%
applicable to: Remuneration paid to
employees in Special Situations, e.g.
persons on jury duty or on duty with
the Bermuda Regiment or Bermuda Volunteer
Reserve, persons employed as farmers,
fishermen or horticulturists and hotel
employees in December, January or February.
-
7.25%
applicable to: Employers and self-employed
persons with an annual payroll of less
than $100,000. Educational, sporting,
or scientific institutions or societies.
Taxi drivers, farmers, fishermen and
horticulturists. The Bermuda Hospitals
Board and the Corporations of Hamilton
and St. George’s.
-
4.75%
applicable to: The Government, Parish
Councils, Government Boards, the Bermuda
College, approved schools, registered
charities, religious and cultural organizations
and the Bermuda Festival Ltd
Additional
changes to the payroll tax system were
announced in the 2007/8 budget, and
included:
-
an
extension to the period during which
they are charged Payroll Tax at the
reduced rate of 7.75%. The months
of November and March were added to
the current period of December through
February.
-
a
concessionary Payroll Tax rate of
4.75% for start-up businesses in the
Economic Empowerment Zone for their
first 12 months of operation.
Under
the Acts, taxable remuneration is defined
to include various benefits, including
pension contributions, rental value,
profit-sharing, stock option gains,
etc.
'Employer'
means anyone, company or individual, who employs
another person; however, there are reduced rates
for employers with a payroll below $100,000 annually.
Just about enough to have a part-time gardener
in Bermuda.
Social
insurance is paid by every employee at the rate
of BMD56.96 per week, with BMD26.48 (2008) due
from employer and employee; this is also deducted
by the employer. A self-employed person also pays
BMD56.96 per week.
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Bermuda
Miscellaneous Taxes and Duties
Land
Tax: An owner of property (or a lessee if the
lease is for more than 3 years) is charged tax
according to the ARV (Annual Rental Value, which
is a notional figure, or the actual rent, whichever
is the higher). The rates are low, but vary.
Stamp
Duty: until recently there was a duty on Bermudan
assets on the grant of probate after death (excluding
shares in an exempt company) at 5% on value
between BMD20,000 and BMD100,000, and 10% thereafter.
The
estate tax and stamp duty system came under
review in 2005 when the government put forward
a proposal to establish protection from estate
tax on family homes. This review resulted in
the passing of the Stamp Duties Amendment Act
2005, announced during the 2006/7 budget, which
exempts the Primary Family Homestead from Stamp
Duty that would otherwise be payable upon the
death of an owner.
It
provides that an owner can designate a property
for this exemption. In particular, it also allows
an owner of more than one property to choose
which one should benefit from the exemption.
It does not affect the existing exemption from
Stamp Duty on assets passing to a surviving
spouse.
In
2008, first-time buyers were given exemption
from stamp duty on the purchase of properties
up to a value of USD750,000.
Stamp
duty is also imposed on a large number of legal
instruments, and on the converyance or transfer
on sale of land at rates of between 2.5% and
6% (2007).
Betting
Tax: 20%
Departure
Tax: $20-$25 on every departure from Bermuda.
Hotel
Tax: 7.25% on revenue received from hotels and
other forms of accommodation.
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Bermuda
Customs Duties
Customs duties are imposed on almost all goods
arriving in the island, and represent a major
source of government revenue. The belongings
of individuals arriving to take up residence
are charged at 22.25% of assessed value (33.5%
for electrical goods) plus 1.01% wharfage
charge, at the time of writing. Books and
clothes (if used) are not charged.
Duties
are waived on construction materials for hotels.
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