New tax agency to have powers to impose fines
The Government is pressing ahead with plans to impose income tax on multinational businesses after further legislation was tabled in the House of Assembly on Friday.
The Corporate Income Tax Agency Act 2024 will set up an agency to administer the calculation and collection of taxes once they come into effect next year.
Last December, MPs passed the Corporate Income Tax Act, which will charge 15 per cent on the profits of multinational enterprises with more than €750 million (about $808 million) of annual revenue.
Under the latest Act, the agency will also be responsible for providing support to companies that are liable for the tariff, ensuring compliance and “prosecuting any enforcement action” against businesses that fail to abide by the regulations.
Officials will have the power to demand financial information from companies that could be penalised with a $100,000 fine and up to two years’ imprisonment if they fail to co-operate.
The Act states: “Where an offence under this section committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other officer of the body corporate, he, as well as the body corporate, shall be deemed to be guilty of an offence and is liable to be proceeded against and punished accordingly.”
The agency will be governed by a board of directors consisting of a chairman and between six and ten additional directors, who will be appointed by the Minister of Finance.
A chief executive officer shall be responsible for the day-to-day management of the agency.
The Act adds: “In addition to the chief executive officer, the agency shall employ such staff and hire such consultants as may be necessary for the proper carrying out of its functions, and such staff or consultants shall be employed or retained on such terms as the agency may determine.”
In a statement, David Burt, the Minister of Finance, said the legislation would maintain the island’s reputation for “robust and effective regulatory oversight”.
“The ministry incorporated, to the extent appropriate, key characteristics of the structure of our well-respected financial services regulator, but where necessary, modified these characteristics to take account of the differing responsibilities between a regulator and a tax authority, using a G7 country as a model for effective reporting, governance and oversight of our tax framework.
“The agency's structure allows for a board of directors to ensure effective governance and oversight and a chief executive officer and staff responsible for effective and appropriate tax administration and enforcement.
“Ensuring that persons with the required experience and expertise to manage the responsibilities appropriately and consistent with Bermuda's reputation as a premier international financial centre are selected for these roles will be a key next step for the Government.
“Through the Ministry of Finance, the Government remains committed to working with all stakeholders to ensure that Bermuda remains an effective and co-operative partner while appropriately addressing global tax matters.”
Details of how much the agency will cost to operate were not disclosed in the Act.
However, the legislation did state that funding shall consist of government grants, loans and “any monies accruing to the agency in the course of the discharge of its functions”.
The Act states: “The agency may, with the approval of the minister and subject to such conditions as he may determine, borrow monies to enable it to discharge its functions under this Act and to meet its obligations.
“The Government may guarantee, by the undertaking of the minister, in such manner and on such conditions as he thinks fit, the payment of the principal and interest on any authorised borrowings of the agency.”
Bermuda signed up for the minimum tax agreement in 2021 after it was put forward by the Organisation for Economic Co-operation and Development. More than 140 countries have committed to implementing the new tax measure.
David Burt, the Premier and Minister of Finance, has repeatedly emphasised that many global companies with offices on island will have to pay the minimum tax rate somewhere, and it was therefore preferable if it was Bermuda that collected the receipts.
According to Mr Burt, about 10 per cent of Bermudian-based multinationals will be impacted by the new tax.
He previously said: “This landmark legislation represents a major milestone in the most fundamental tax reform in Bermuda’s modern history.
“The corporate income tax will also fulfil Bermuda's commitment to participate in the global minimum tax initiative being implemented around the world.”
• To read the legislation, see Related Media
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