BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale and Tyson Oladokun, Walkers
may include an overseas company or partnership registered in Bermuda) may be subject to Bermuda’s economic substance laws to the extent that they are conducting a relevant activity under those laws and would thereby be required to have a substantial eco - nomic presence in Bermuda. The CIT Act taxes Bermuda-based entities on a book- income basis and relies on transfer pricing or arm’s length rules for related-party dealings. 6.7 The Sale of Shares in Non-Local Affiliates Bermuda does not tax gains realised by a local cor - poration on the sale of shares in non-local affiliates. Generally, Bermuda does not have an anti-avoidance system, but the CIT Act has introduced specific anti- avoidance measures, substance requirements and strict enforcement provisions. This relies on targeted integrity measures, including: • an arm’s length transfer pricing rule for covered cross-border related-party transactions within an In-Scope MNE Group; and • administrative enforcement powers administered by the CITA. Bermuda’s economic substance regime also remains relevant as a separate compliance framework for enti - ties conducting relevant activities in and from within Bermuda. 7. Anti-Avoidance Provisions 7.1 Overarching Provisions
A key component of the BMA’s supervisory regime is the requirement for regulated companies to pro - vide the BMA with annual statements audited by an approved auditor. Bermuda does not operate a fixed routine audit cycle for non-regulated companies. Bermuda companies are required to prepare audited financial statements on an annual basis but this requirement may be waived for a specific period or indefinitely if the directors and shareholders agree. 9. BEPS 9.1 Adoption of BEPS Recommendations Bermuda has implemented several BEPS-aligned measures, including economic substance require - ments, Country-by-Country Reporting (CbCR), par - ticipation in the OECD Inclusive Framework, and a 15% corporate income tax for In-Scope MNE Groups as its Pillar Two response. • Economic Substance Requirements mandate enti - ties conducting relevant activities, such as bank - ing, insurance, fund management, shipping and holding companies, to demonstrate that they have adequate economic presence in Bermuda. • CbCR requires large MNE groups with revenue over EUR750 million to submit reports to tax authorities with detailed financial information, including global profits and taxes, to ensure transparency. • The OECD Inclusive Framework includes initiatives such as the Pillar Two global minimum tax of 15% and implementing substance requirements for key activities to meet international standards. • The CIT Act introduced a 15% corporate income tax on BCEs that are part of an In-Scope MNE Group. • The Tax Credits Act 2025 introduced new corpo - rate tax credits to encourage investment in Ber - muda, linking tax relief to local jobs, spending and charitable donations. 9.2 Government Policy and Objectives Approach The Bermuda government viewed BEPS as an oppor - tunity to implement reforms to its tax regime, retain tax revenue and boost its attractiveness for international
8. Audit Cycles 8.1 Regular Routine Audit Cycle
The Bermuda Monetary Authority (BMA) is responsible for the supervision, regulation and inspection of Ber - muda’s regulated entities, and regularly audits such companies through a combination of off-site analysis of financial returns, regular prudential meetings with management and on-site compliance visits. The vari - ous regulatory acts provide the BMA with substantive licensing, supervision and intervention powers.
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