The Government’s hopes of hundreds of millions in annual corporate income tax revenue seemed less assured last night after a Day 1 executive order by the new US President threatened the existence of a European-led, global corporate tax initiative.

A White House memorandum aimed directly at the Organisation for Economic Co-operation and Development and their hard-fought international tax agreement, has expressed deep concerns about its value to the US.

President Trump’s list of executive orders includes threats of harsh penalties for any government that tries to raise taxes on American companies.

Last night, the Bermuda Government seemed certain that its assumptions of corporate tax revenue remained sound but the One Bermuda Alliance offered another view.

In October 2021, more than 135 countries reached an agreement on the minimum effective taxation of large corporate groups.

The corporate income tax, an agreement thought to be secure, imposes a surtax on the world’s largest companies, what the Wall Street Journal said was “aimed primarily at American tech and pharma firms”.

It also sought a minimum global effective tax rate of 15 per cent. European governments would be able to impose “top-up” taxes on US companies, should their US tax bills at home be deemed to be too low.

Bermuda too, was to benefit, after raising its effective corporate income tax rate from zero to 15 per cent.

The 2024-25 Bermuda Budget statement conservatively projected $187 million in CIT revenues for the coming fiscal year.

In future years, the government said the corporate tax revenues could eventually be some $750 million annually – nearly 75 per cent of the size of the last annual budget.

All of that could be threatened by the new stance taken by the Trump Administration, forewarned repeatedly since his decisive election victory and especially after the Republican Party established a stranglehold over all the major branches of government.

But a government spokeswoman was confident last night. She said: “The Bermuda international business community has a diverse geographical footprint, as a result it would be expected that the Global Minimum Tax will be collected on Bermuda-based businesses by in-scope jurisdictions.

“The Bermuda CIT is a domestic tax for Bermuda-based businesses and does not contain tax measures such as the GMT Income Inclusion Rule and Under Taxed Profit Rule, which are of primary concern to the new US administration.

“We do not expect that the Bermuda CIT or any related actions of the Bermuda Government to date should fall within matters highlighted by the new US administration.

“Therefore, at this time, we do not anticipate any changes or adjustments will be required for the Bermuda CIT.”

The statement came as Doug DeCouto of the OBA reacted to global headlines about the White House moves by insisting that the Trump Administration may create risk for Bermuda in at least three ways.

He said: “First, Trump has stated he will impose and increase tariffs on imports to the US. It is generally acknowledged this will increase the cost of goods in the US. Given that most of our goods are imported from the US, this will increase the cost of goods for us here in Bermuda and therefore the cost of living.

“Second, Trump has stated he wants to reduce the US corporate income tax rate. This could further erode the pure tax advantage for companies operating out of Bermuda. This will make it even more important for Bermuda to improve in its competitiveness in other areas, such as Government services, education, and healthcare. Unfortunately the PLP Government has shown little to no progress in these areas.

“Finally, Trump’s actions may put the OECD global minimum tax regime at risk. For example, countries may elect to opt-out if global buy-in to the minimum tax is reduced. In that case, Bermuda could possibly decide to reduce or otherwise alter our own Corporate Income Tax at that time. Either way, it’s likely that Bermuda will encounter stiffer competition for companies to do business here on a tax basis, or will get less CIT revenue than planned.

“All of the above are still very hypothetical outcomes in a very dynamic situation, which we are monitoring closely.

“That’s why the One Bermuda Alliance stands by its original position that the amount of CIT revenue will be highly variable in both amounts and timing and that we must handle and use this revenue responsibly for the best long-term results for the country.”

A widely read WSJ Editorial Board opinion headlined: “The End of the Global Tax Affair” features a sub-deck: “Trump drops the axe on a corporate-tax deal whacking US firms”.

President Trump’s memo stated: “Because of the Global Tax Deal and other discriminatory foreign tax practices, American companies may face retaliatory international tax regimes if the United States does not comply with foreign tax policy objectives.”

It said: “This memorandum recaptures our nation’s sovereignty and economic competitiveness by clarifying that the Global Tax Deal has no force or effect in the United States.”

The OECD secretary general, Mathias Cormann, said this week that it would continue to work with the United States and all countries involved.