Bermuda To Change Tack On Tax Reform
by Mike Godfrey, Lowtax.net, Washington
19 January, 2018
Bermuda has hinted that it will soon offer a tax amnesty and drop plans for the introduction of a general service tax.
According to the Government's newly released 2018/19 pre-Budget report, the tax amnesty would involve a waiver of late-payment penalties for those that regularize their affairs.
Meanwhile, general service tax, which was to be introduced from 2018, is unlikely to go ahead, but the Government says it is considering implementing a professional services tax in 2018/19 on services delivered to Bermuda companies. The tax will be limited initially to services provided by the legal and accounting professions, as well as other business and management consultancy services.
A second phase of payroll tax reform, which had been proposed by the former government, will not proceed. The new Government wants to instead review the current tax mix, which is excessively weighted towards the taxation of labor and goods.
The Government further said the Office of the Tax Commissioner will be given further resources to crackdown on underdeclared income of professionals, and the Payroll Tax Act will be updated with more objective criteria for determining notional income figures going forward.
Looking ahead, the report notes the island government's determination to deal with a variety of challenges to Bermuda's economy, including global initiatives in financial regulation, the upcoming Caribbean Financial Action Task Force assessment of Bermuda's anti-money laundering and countering the financing of terrorism regime, and potential EU action to blacklist Bermuda as a "non-cooperative" tax jurisdiction.
The report also identifies recent US tax reform measures as having the potential to adversely affect Bermuda, including the lowering of the US corporate tax rate from 35 percent to 21 percent, which impacts on the island's comparative advantage as a place to do business. The taxation of insurance premiums paid from the US to offshore companies is also identified as a source of concern, since this would adversely affect Bermuda's insurance businesses.
See all of today's news