Credit where its due: Bermuda’s tax reform unpacked

On 4 September 2025 the Ministry of Finance released a public consultation on tax credits (Tax Credits PC).  This consultation is part of the larger Tax Reform Commission Report 2025 (Report) and proposes the introduction of the following three specific tax credits:

1. Substance based tax credit for regulated insurers

     The aim of this tax credit is to incentivize higher employment levels, local expenditure, and economic substance.  The credit structure will include both job-based and expenditure-based components. 

2. Community development benefit credit

     This tax credit will implement a 25% tax credit for donors contributing more than $100,000 annually (averaged over three years) to registered Bermuda charities.

3. Utilities infrastructure benefit credits

     These tax credits are for utility companies investing in infrastructure improvements based on OECD Substance-Based Income Exclusion provisions, encouraging continued investment in essential infrastructure whilst reducing long-term utility costs.

The three tax credits discussed above are the first stage of an overall tax credit program which will develop over time.  Further types of tax credits that are being considered include a housing infrastructure tax credit (aimed at addressing the housing shortage and support workforce growth) and an innovation tax credit (aimed at encouraging technological advancement and diversification).  The implementation date for these two tax credits is 2026-2027.

Included in the Tax Credits PC is a draft Tax Credits Act 2025, which is subject to amendments based on the feedback received from the consultation.  There will also be related administration regulations and amendments to the Corporate Income Tax Act 2023 and the Corporate Income Tax Agency Act 2024 that will be developed in conjunction with the Tax Credits Act 2025.

Overall, the implementation of tax credits in Bermuda is part of a transition from a consumption and employment based taxation structure toward a more balanced system enhancing both equity and economic competitiveness. Comments regarding the Tax Credits PC should be sent to finance@gov.bm by 25 September 2025.