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Bermuda there are no taxes on profits,
dividends or income; there is no capital
gains tax, no withholding tax and no
sales tax. The main tax impinging on
companies is payroll tax. See Types
of Company for details of annual
fees payable depending on status.
the European Savings Tax Directive came
into effect in 2005, most offshore dependent
territories of the UK and other EU member
states rolled over and accepted the
necessity of implementing a
withholding tax on savings interest
payments to EU residents. Bermuda, however,
appears to have escaped the worst.
Bermuda Payroll Taxes
Under the Payroll Tax Act 1995 and later
legislation, Bermudan employers have
traditionally had to pay a tax of 12.75%
of payroll; in the case of 'local' companies
or partnerships, ie those with 60% Bermudan
ownership, this is calculated on the
actual payroll cost; in the case of
exempt or permit companies or partnerships,
ie those with foreign ownership, there
is a choice between paying 12.75% on
actual salaries like local companies,
or paying the 12.75% on a notional amount
of BMD66,000 per employee, when it amounts
to BMD7,920 per employee per year. (See
Types of Company
for descriptions of the different types
have also been able to recover 4.5%
of the payroll tax from employees (on
their actual salary, not the notional
the 2004/2005 financial year, the 12.75%
rate was raised to 13.5% for firms with
payrolls amounting to more than BMD200,000
per year. In the February budget for
2005/2006, Bermuda’s Minister
of Finance Paula Cox announced a restructuring
of the payroll tax system in an attempt
to assist small and medium-sized enterprises
and attract new business to the jurisdiction.
In the 2008/9 budget, the standard rate
of payroll tax was raised again, by
0.5% to 14%, for businesses with annual
payrolls of BMD1 million or more. The
payroll tax salary cap, which was raised
from BMD225,000 to BMD235,000 in 2004/5,
and to BMD350,000 in 2007/8, was left
on hold in the 2008/9 budget. In the
2009/10 budget, the salary cap was raised
to BMD750,000 and the tax raised by
two percentage points to 16%.
an attempt to stimulate Bermuda's economy
the tax rate was rolled back to 14%
in the 2011/12 budget, keeping the salary
cap at BMD750,000.
2011 rates are as follows:
applicable to: Taxpayers with an annual
payroll greater than BMD1m and exempt
applicable to: Taxpayers with an annual
payroll greater than BMD500,000 and
up to BMD1m.
applicable to: Taxpayers with an annual payroll
between BMD200,000 and BMD500,000.
applicable to: Taxpayers operating an hotel
or restaurant with an annual payroll of BMD200,000
applicable to: Remuneration paid to employees
in special situations, e.g. persons on jury
duty or on duty with the Bermuda Regiment
or Bermuda Volunteer Reserve, persons employed
as farmers, fishermen or horticulturists and
hotel employees in December, January or February.
applicable to: Employers and self-employed
persons with an annual payroll of less than
BMD200,000, educational, sporting, or scientific
institutions or societies, taxi drivers, farmers,
fishermen and horticulturists, the Bermuda
Hospitals Board and the Corporations of Hamilton
and St. George’s.
applicable to: The Government, Parish Councils,
Government Boards, the Bermuda College, approved
schools, registered charities, religious and
cultural organizations and the Bermuda Festival
the Acts, taxable remuneration is defined to include
various benefits, including pension contributions,
rental value, profit-sharing, stock option gains,
paying the top three rates of payroll tax and
those operating an hotel or restaurant are entitled
to Special Relief. Taxpayers in this category
are entitled to a deduction from total remuneration
paid during the tax period. This deduction is
equal to BMD600.00 per employee per quarter.
qualifying criteria are that the employee must
be on the payroll at the end of the tax period
and must have worked for the employer for a minimum
of 180 hours in that quarter. However, the amount
of Payroll Tax payable by any such employer in
respect of an employee whose remuneration is subject
to the Special Relief, cannot be less than 5.25%
of gross remuneration. Self-employed persons and
deemed employees are not eligible for Special
means anyone, company or individual, who employs
another person; however, there are reduced rates
for employers with a payroll below BMD100,000
annually. Just about enough to have a part-time
gardener in Bermuda.
Bermudan employers must pay social insurance
contributions in respect of every employee
over 16 years old, and who works more
than 4 hours per week; half of the amount
paid may be deducted from the employee's
(non-Bermudian) employees are covered
by the tax, retrospectively if necessary,
if they work for six months or more
in the country.
must provide the Social Insurance Department
at the Government Administration Building
with a list of their employees and their
social insurance numbers; the Department
bills employers monthly.
2011, the social insurance contributions
are BMD60.80 per week, BMD30.40 due
from each of the employer and employee
and is unchanged from 2010.
Filing Requirements and Payment of
An employer must register with the
Tax Commissioner's office as soon
as he becomes liable to pay tax. There
is a quarterly return which must be
accompanied by payment. The payment
process must be completed by the 15th
of the month following the quarter
Under the Hospital Insurance Act 1970,
Bermudan employers must take out health
insurance for each employee under
a contract with a licensed health
insurer, or through the Government's
Hospital Insurance Premium Scheme.
It is possible to have a new insurer
approved as a licensed health insurer
on application to the Government.
of the cost of health insurance may
be deducted from the wages of employees.
Employees working fewer than 45 hours
per month can be exempted from the
scheme; employees working in Bermuda
for less than six months are not included.
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