Bermuda Budget Features New Financial Services Tax, Defers GST
by Mike Godfrey, Lowtax.net, Washington
02 March, 2017
Bermuda's Minister of Finance, Edward Richards, has announced a new Financial Services Tax will be introduced in April 2017.
The new tax will be payable by banks, local insurance companies, and money services businesses.
Banks will pay the new tax at a rate of 0.02 percent on their assets, while local insurance companies will pay the tax at a rate of 2.5 percent on gross premiums earned, excluding premiums from health insurance. Money services businesses will pay the tax at a rate of five percent on their aggregated incoming and outgoing transmission volume.
Other measures announced in the Budget include a move away from the current flat rate of payroll tax. Those earning up to BMD96,000 (USD96,000) a year will see their payroll tax liability fall, while higher earners will pay more. Employment tax on employers will also be amended so that the tax burden falls more on larger companies than on small businesses.
The implementation of the five percent General Services Tax (GST) has been delayed until April 1, 2018. The GST, which was announced last year, will be levied on turnover from the provision of most services by service providers to the public. Banking, insurance, and money services businesses will be exempt.
Customs duty has been simplified with a reduction in the number of tariff bands. The top rate of duty has been increased by 1.5 percent to 35 percent. Excise duties on alcohol, tobacco, and petrol have also been increased.
Land taxes for the coming year remain unchanged, and the previously announced roll-back of non-legislated tax concessions for hotels restaurants and retailers will be completed.
Certain fees will also increase including annual fees for "investment/holding/trading" permit companies, which will rise from USD1,995 to USD25,000.
Richards said the Budget measures were intended to broaden the tax base and ease cost-of-living pressures on lower-income earners.
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