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Bermuda To Hike Payroll Tax, Introduce Services GST

by Jason Gorringe, Lowtax.net, London
22 February, 2016

Bermuda has announced that it will hike its payroll tax, and introduce a general services tax with a five percent rate from as early as April 2017.

The revenue-raising measures were announced in the territory's 2016/17 Budget, which also features hikes to duties on fuel, alcohol, and tobacco and changes to the real property tax regime.

The new general services tax, which is expected to eventually generate BMD50m (USD50m) a year, will be levied on receipts from services rendered to the public from April 1, 2017, at the earliest. The banking, insurance, and health care sectors will be exempt from the levy, along with small service providers.

The standard rate of payroll tax will be set at 15.5 percent in 2016/17, up one percent, with the burden of the tax increase to be shared between employers and employees. Most other payroll tax rates will also rise by one percent.

The increase to the payroll tax rate is said to be an interim measure pending the implementation of a reformulated payroll tax structure, which is slated for next fiscal year, the Government said. A consultation on a new payroll tax structure is underway, with measures to make the regime more progressive and tackle abuse. Payroll tax concessions for the hospitality, restaurant, and retail sectors will continue to be rolled back.

New Land Tax rates will be apply to the new Annual Rental Values (ARV) list. The new rates, announced at the end of 2015, will be introduced alongside a cut to the exempt threshold for seniors for their primary property from BMD50,000 (USD50,000) to BMD42,000 (USD42,000).

A new tax filing policy will be implemented on April 1, 2016, obliging taxpayers with a gross annual payroll costs exceeding BMD1m (USD1m) per year to file online using the existing E-Tax system.

Last, Bermuda will simplify its customs tariffs and other revenue-raising regulations to make them efficient and user friendly. In 2017/18, the Government will legislate to levy excise taxes, and, in 2016/17, the Government will prepare for the introduction of a single unified tariff.

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