Corporate income tax legislation was passed by the Senate yesterday without amendment.

While the One Bermuda Alliance had sought to put forward amendments to the Corporate Income Tax Act 2023 to earmark proceeds for debt repayment, it was ruled they were not permitted to do so in the Senate as it was a “money bill”.

Douglas De Couto, the OBA senator and shadow finance minister, said he did support the legislation as a “critical national initiative”, but he said the party wanted the proceeds from the tax to be ring-fenced, citing “questionable decisions” by the Government.

“Our conclusions are a response to a specific fact pattern,” Dr De Couto said. “We believe the right policy would be for the Government to ring-fence these proceeds in law.”

The Reverend Emily Gail Dill, the PLP senator, said she was “shocked” to hear about the amendment by the OBA and suggested that the Opposition was attempting to push a false narrative that the money would not be used prudently.

Dr Dill argued that the PLP had shown its ability to govern prudently, noting that the Government had recently put $50 million down on the national debt and was moving towards a balanced budget next year.

The Corporate Income Tax Act is scheduled to take effect in 2025 and will charge 15 per cent on the profits of multinational enterprises with more than €750 million (about $808 million) of revenue annually.

According to the Government, 140 OECD member countries have signed up to the change, which will level the tax playing field globally.

Arianna Hodgson, the Junior Minister of Labour, Finance and Health, said that further work would need to be carried out over the coming year before the tax can come into effect, including the creation of a body to collect the tax.

Ms Hodgson said that the introduction of the tax would not scare away multinational businesses because if they were to relocate they would have to pay the tax in another jurisdiction.

She said that it was difficult to gauge how much revenue the tax would raise for the island, but said it could be “substantial” and could overtake payroll tax as the largest earner for the Government.

However, while payroll tax is fairly steady, she said the Corporate Income Tax would vary based on the profits of the international businesses.

Dr De Couto said the introduction of the CIT was significant, and he praised the Government’s work consulting with the international business.

He said the amount raised through the tax would be difficult to predict or plan for, and the Government must be careful managing the proceeds.

“We would like to see the ring-fencing of this excess written into law,” he added. “That is an OBA policy we would put forward.”

Dr De Couto said that while it had been suggested that the OBA’s amendment came “out of arrogance”, he highlighted a recent report by the Fiscal Responsibility Panel that found Bermuda was on a “burning platform”

He added: “Upsides could exist, but we need to put out the fire.”

John Wight, the independent senator, said the legislation was critical for Bermuda to maintain its gold-standard reputation.

Kiernan Bell, the Senate Vice-President, also voiced her support for the Bill, although she added that there was still much work to be done.

She said that while she did not see anything included in the recent pre-Budget report, she would expect to see investments in the infrastructure needed to support the “seismic shift” in the island’s tax structure.

Ms Bell said that costs would come before revenue, and could be significant, but she would be more concerned if a significant investment was not made.

Ms Hodgson closed the debate stating that the Government had sought to give international business ample time to begin financial planning for the new tax.

She added that she expected recommendations from the Tax Reform Commission to help chart the path forward.