On August 8, 2023, the Government of Bermuda issued a Public Consultation on the Introduction of Corporate Income Tax in Bermuda for tax years beginning on or after January 1, 2025.
Currently, Bermuda does have impose corporate income tax, and raises revenue by the application of a Payroll Tax under the Payroll Tax Act, 1995.
However, this would not be a covered tax for the purposes of the GloBE rules (as it is not levied on income or profits and doesn’t meet any of the other requirements to be a covered tax). The OECD Commentary to the Model GloBE Rules specifically excludes Payroll Taxes from the definition of Covered Taxes under the GloBE Rules. As such they would be treated as deductible in the calculation of the GloBE Income or Loss.
This would, therefore, potentially expose in-scope MNE groups to double taxation on the income of their Bermudian subsidiaries:
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