BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale and Tyson Oladokun, Walkers
2.6 Consolidated Tax Grouping The CIT Act is fundamentally group-based, as cor - porate income tax is imposed on a BCE Group and is calculated by reference to the group’s net taxable income for the fiscal year, with a designated BCE being responsible for filing and administration. 2.7 Capital Gains Bermuda does not impose a capital gains tax on cor - porations. Exempted undertakings (including exempted compa - nies, LLCs and partnerships) are entitled to apply for and will usually be issued with a statutory assurance under the Exempted Undertakings Tax Protection Act 1966 that, if Bermuda was to enact legislation imposing a tax computed on profits or income, capital assets, gains or appreciation or estate duty or inher - itance tax, such tax will not apply to the exempted undertaking or its operations until 31 March 2035. Fol - lowing the enactment of the CIT Act, this assurance does not apply to any BCEs that are liable for corpo - rate income tax as part of an In-Scope MNE Group but will otherwise apply. 2.8 Other Taxes on Transactions Due to the tax assurance issued to exempted under - takings, such undertakings are not generally subject to tax in Bermuda, other than payroll taxes. Exempted undertakings are not generally subject to stamp duty because stamp duty applies to specific Bermuda‑connected instruments, and exempted undertakings are designed to conduct international business without creating Bermuda taxable transac - tions. For local companies, LLCs and limited partnerships, other taxes would include payroll taxes, stamp duties and land tax on commercial real estate transactions. 2.9 Other Notable Taxes There are no other notable taxes.
including premises, tangible assets, training, eligible services and other expenses, with a total cap of 25%. Other Tax Credits The community development tax credit provides a 25% credit for eligible charitable contributions, applicable across all industries. To qualify for this credit, businesses must meet a minimum threshold of USD300,000 in cash contributions over a three- year rolling period. Contributions must be directed to registered Bermuda charities with audited accounts, ensuring that at least 75% of the funds support Ber - muda-based purposes. The utilities infrastructure tax credit applies to entities that are regulated utilities with respect to electricity generation and distribution, digital communications and fuel distribution. The credit is designed to sup - port capital-intensive infrastructure development in Bermuda. 2.4 Loss Relief The CIT Act includes a tax loss carry-forward deduc - tion mechanism as part of calculating net taxable income and net taxable loss. As mentioned in 2.1 Tax- able Profits , the opening tax loss carry-forward elec - tion allows entities to carry forward losses incurred over a prior five-year period, as an offset to future profits. There is an 80% limit on the use of tax loss carry- forward deductions. This limit may not apply where an insurance company incurs a shock loss (an event with a probability of 0.5% or less). Only losses arising under the CIT Act after the introduction of the CIT Act, including any permitted transitional losses, may be carried forward to offset future taxable income. 2.5 Deduction of Interest There are no limits imposed on interest deductions, as there will be no corporate income tax for most local companies in Bermuda. The 15% tax rate imposed by the CIT Act applies only to Bermuda businesses that are part of an MNE group with annual revenues of EUR750 million or more. Therefore, most local com - panies will not be subject to the CIT Act.
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