This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
 

Bermudan Budget Announced

Wednesday, March 3, 2010

Having been buffeted by the ill winds of the global financial crisis, Bermuda's Finance Minister Paula Cox told the legislature that it is now time for the island to "fortify" its tax base.

Outlining measures in the 2010/11 budget, Cox told the local assembly that:

“Having provided for social reinvestment in the community by granting tax concessions worth several tens of millions of dollars over the last several years, it is time now to refortify our tax base to meet the opportunities and challenges of the future.”

“Fairness, sustainability and a sharing of the burden will be the guiding principles of the planned changes to the tax base. The public sector spending that sustains the long-term health of the economy will not be sacrificed."

Cox explained that the government would instead introduce targetted fiscal measures to generate extra revenues while achieving growth, creating jobs, and providing support for distressed industry sectors.

While Cox’s budget will increase the tax burden, revenues of BMD1.05bn (USD1.05bn) - an increase of BMD124m on FY2009/10 – will still not be sufficient to balance the budget in FY2010/11, with a projected budget shortfall of BMD143m anticipated.

Explaining the need to increase the tax burden, Cox continued: “Sustainable public finance requires that we make every effort to live within our means and although the public may not wish to pay more for the increased public services they desire, it is incumbent that we have a tax model that does not perpetuate spending without an increase in the revenue stream. Anything less would not add up or be a sensible and prudent approach.”

“In 2010–2011, government proposes to increase payroll tax, foreign currency purchase tax, stamp duty on estates, vehicle licenses and implement the biennial review of government fees,” she announced.

According to the budget document, the standard rate of payroll tax, which was last adjusted in 2008, will be set at 16% in 2010–2011, an increase of 2%. There will also be a similar adjustment of two percentage points for the other rate categories. The yield from the revised rate structure for payroll tax is estimated at BMD427m in 2010–2011, or 40.3% of total revenues.

The rate of tax recoverable from employees, which was last amended ten years ago in the year 2000, will be set at 5.75% in 2010–2011.

A relief provision is being built into the payroll tax structure for retail establishments during the months of January, February and March when tax will be payable at a reduced level.

The salary cap for purposes of the payroll tax was last reviewed in 2007. It was scheduled for a biennial review last year but the review was postponed given the anticipated downturn in the economy. The salary cap will be re-set at BMD750,000 from April 1, 2010 and will continue to be subject to regular periodic reviews.

The restaurant and hotel sector will continue to receive relief from payroll tax. In addition, the taxi sector will now be exempt from payroll tax for the tax period beginning January 2010, following lobbying by affected parties. The relief will take the form of a rebate of payroll tax paid by taxi owners, taxi drivers and specified taxi dispatchers for that tax period. The payroll tax exemption for trainees, interns and apprentices is still in force.

The yield from customs duty in 2010–2011 is estimated at roughly BMD232m. Following consultation with the Retail Division of the Bermuda Chamber of Commerce, the customs tariff will be amended to reduce the rate of duty on certain consumer electronic items such as televisions to bring the assessed duty in line with other consumer electronics. In addition, in an effort to provide greater relief to the retail sector, the government is to look to reduce pressure on businesses’ cash flows in relation to the upfront payment of customs duty on specified items.

The fuel concession for commercial fishermen also will be extended for an additional year to March 2012, and gasoline will be included in the concession. Previously the concession was for diesel fuel only.

Revenues from land tax are set to increase, to an estimated BMD50m in FY2010/11, due to an increase in annual rental values, which were revised in January 2010.

Government fees for an array of services provided to the public will be increased generally by 3% and motor vehicle licenses will be increased by 5%. The government has also announced that stamp duty on estates will be modified to increase the tax-take.

There will not be any increase in bus and ferry fares. Passenger tax, hotel occupancy tax and company license fees have also remained unchanged.

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.


The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




Latest News

Australian DPT Legislation Passes Senate
27/3/2017
The Australian Senate has passed legislation to introduce a diverted profits tax from July 1, 2017.

Guernsey Funds Sector Grew In 2016
27/3/2017
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.

New Zealand Explains Foreign Trust Disclosure Changes
27/3/2017
New Zealand has published guidance on the increased disclosure requirements for foreign trusts with New Zealand-resident trustees.

Canadian Budget Focuses On 'Tax Fairness'
23/3/2017
The tax measures contained Canadian Finance Minister Bill Morneau's second Budget are focused on closing loopholes, cracking down on tax evasion, and improving tax reliefs for the "middle class."

Jersey Regulator Issues AML/CTF Funds Guidance
16/3/2017
Jersey's financial services regulator, the Jersey Financial Services Commission, has issued new anti-money laundering and countering the financing of terrorism guidance for Funds and Fund Operators.

More Tax Hikes For UK Taxpayers In 2017 Budget
9/3/2017
The UK Budget, released on March 9, 2017, featured tax measures to, among other things, hike taxes on self-employed workers, further close avenues for legal avoidance, and defer mandatory digital tax reporting until April 2019.

ACOSS Submits Recommendations For Australian Budget
2/3/2017
The Australian Council of Social Services has urged that the Government abolish ineffective tax concessions, introduce a sugary drinks tax, and scrap its company tax proposals.

MEPs Call For Wider Access To Beneficial Ownership Data
1/3/2017
EU citizens would be able to view information in registers of beneficial ownership without having to demonstrate a "legitimate interest," under proposed amendments the Anti-Money Laundering Directive.

New Zealand Tax Changes Enter Into Force
28/2/2017
A Bill including provisions to simplify New Zealand's tax processes, reduce compliance costs for smaller businesses, and tighten foreign trust disclosure rules received Royal Assent on February 21.

Guernsey Introduces Client Asset Handling Rules
22/2/2017
Guernsey's financial services regulator, the Guernsey Financial Services Commission, said it intends to introduce rules governing the holding and administration of client assets in 2017.

Australian Accountants Urge Tax Burden Shift
14/2/2017
Australia desperately needs large scale tax reform and should aim to rebalance its tax mix, the Institute of Public Accountants has argued.

IRS Issues Final Regulations On REIT Spin-Offs
24/1/2017
On January 18, the US Internal Revenue Service issued its final regulations regarding the measures included in the Protecting Americans from Tax Hikes Act to restrict the tax-free spin-offs involving publicly traded real estate investment trusts (REITs).

Bermuda, EU To Collaborate On Insurance, Pensions Oversight
17/1/2017
The European Insurance and Occupational Pensions Authority and the Bermuda Monetary Authority have newly signed a memorandum of understanding.

Hong Kong Consults On Beneficial Ownership Plans
13/1/2017
Hong Kong's Financial Services and the Treasury Bureau has launched public consultations on legislative proposals to increase the transparency of corporate beneficial ownership in the city, and to enhance its regulatory regime for combating money laundering and terrorist financing.

Hong Kong Reports On Incorporations In 2016
12/1/2017
There was an increase in local company incorporations in Hong Kong in 2016, although incorporations by foreign companies experienced a dip, according to the territory's Companies Registry.