On 4 September 2025, the Government of Bermuda launched a public consultation on draft legislation proposing the introduction of three new tax credits under the Corporate Income Tax regime. These credits are intended to encourage investment in Bermuda, promote community contributions and support infrastructure development.
Overview of Proposed Tax Credits
The draft Tax Credits Act 2025 proposes the following measures:
Substance-Based Tax Credit
This credit is primarily aimed at Bermuda's insurance sector. It would reward companies that demonstrate meaningful economic presence on-island. Eligible expenditure includes hiring Bermuda-based employees, providing training, and maintaining physical operations in Bermuda. The credit is designed to reinforce Bermuda's standing as a jurisdiction that values substantive activity.
Community Development Tax Credit
This measure encourages companies to increase charitable giving in Bermuda. Contributions to eligible local charities could be offset through a tax credit, recognising the role that the private sector plays in supporting community initiatives. It is intended to foster closer links between businesses and the community while reducing the cost of philanthropy for companies.
Utilities Infrastructure Tax Credit
This credit is intended to incentivise corporate investment in Bermuda's critical infrastructure, such as energy, water, and telecommunications. It includes mechanisms tied to payroll and investment in tangible assets. The objective is to stimulate long-term infrastructure improvements that benefit both businesses and residents.
Consultation Process
The Government is seeking feedback on the draft legislation and any further guidance needed to support implementation. The Government notes that the draft text is illustrative and subject to change before being tabled in Parliament. The consultation period end on 25 September 2025. Submissions should be made by email to finance@gov.bm, with "Tax Credits" in the subject line. The consultation paper and draft legislation are available here.
Next Steps
Entities that may benefit from the proposed credits, particularly insurers and companies with significant Bermuda operations should review the consultation paper and consider submitting feedback within the consultation window.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
