On 17 February 2025, the Government of Bermuda released its third consultation paper on the Corporate Income Tax Act 2023 (CIT Act), focussing on provisions to ensure the effective administration of the CIT Act. This follows a careful review of feedback from the first two consultations, further refining the proposals to strike a balance between ease of administration and taxpayer compliance costs and robust tax collection and liability determination mechanisms. The consultation closes on 10 March 2025, and stakeholders are invited to submit their comments and suggestions via email.
The CIT Act applies to any entity incorporated, formed or organised in Bermuda or that has a permanent establishment in Bermuda, Bermuda Constituent Entities (BCEs), if that BCE is a member of an In Scope MNE Group (ie with respect to a fiscal year beginning on or after 1 January 2025, a group of entities related through ownership and control that has an annual revenue of €750 million or more in a fiscal year, pursuant to the consolidated financial statements of the ultimate parent entity, in at least two of the four fiscal years immediately preceding the fiscal year, and such group includes at least one entity located in a jurisdiction that is not the parent entity's jurisdiction), regardless of any assurance given pursuant to the Exempted Undertakings Tax Protection Act 1966. The consultation introduces the draft Corporate Income Tax Administrative Regulations 2025 (Regulations) to define key administrative procedures, covering areas such as registration requirements, the confidentiality of electronic records, and the designation of Filing Bermuda Constituent Entities (FBCEs) which will handle tax returns on behalf of their groups, streamlining compliance obligations.
Part 2 of the proposed Regulations relates to the registration of BCEs, enabling the tax agency to maintain accurate and updated records for effective tax administration. It defines timeframes for registration, specifies the need for annual updates and allows for the cancellation of registrations where necessary. It is anticipated that, in most cases, most entities will have submitted the required information for registration when it completed the annual declaration for companies and partnerships.. However, those entities failing to provide the required information must register separately. Designation of FBCEs, including provisions for modification or revocation, is also addressed to ensure clarity in filing responsibilities.
This consultation invites all stakeholders, from businesses to tax professionals, to provide input on these comprehensive regulations. With the aim of striking the right balance between simplicity and efficiency, the Government of Bermuda is committed to creating an equitable and effective tax administration framework. Feedback will help further refine these provisions and ensure a seamless transition for affected entities.
The press release can be accessed here and the consultation here.
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