Global minimum tax takes effect in Bermuda



IFCreview.com on February 18, 2025, published a new overview of how Caribbean countries are dealing with demand for the new global tax being pushed by the Organisation for Economic Cooperation and Development (OECD).

“Caribbean IFCs – historically reliant on low tax strategies to attract foreign investment – are balancing the need to comply with external regulatory pressures, and their own economic interests,” the IFC review details.

The OECD/G20’s Base Erosion and Profit Shifting (BEPS) 2.0 project is designed to combat tax avoidance by multinational corporations (MNCs) by implementing a global minimum tax of 15 per cent.

The OECD estimates that 100-240 billion in lost revenue annually (equivalent to 4-10 per cent of global corporate income tax revenue) is lost each year through base erosion and profit shifting.



The report notes how some Caribbean jurisdictions (mostly non-IFCs like Suriname, Jamaica and Trinidad & Tobago) already have statutory corporate tax rates exceeding the global minimum tax threshold of 15 per cent.

However, for those which are no-tax or low-tax jurisdictions, the global minimum tax could lead to a loss of revenue. The Cayman Islands and BVI for example have taken a ‘wait and see’ approach and have not made any commitments to implement the global minimum tax as yet IFC review states.

However, most Caribbean jurisdictions have begun taking proactive steps to engage with the OECD and adjust their tax frameworks.

Bermuda passed its Corporate Income Tax Act of 2023, as well as the Corporate Income Tax Agency Act of 2024, establishing the agency to administer the new CIT. The legislation came into force on December 27, 2023, and will apply from fiscal years starting on or after January 1, 2025. It introduced a corporate income tax of 15 per cent applicable to Bermuda constituent entities that are part of MNE groups with annual revenue of €750 million or more.

Barbados passed the Corporation Top-up Tax Act of 2024, which introduced a Qualified Domestic Minimum Top-Up Tax (QDMTT) on qualifying resident companies that are members of a multinational enterprise (MNE) group with annual consolidated revenue of 750 million euros or more.

“It also made amendments to its Income Tax Act by passing the Income Tax (Amendment and Validation) Act, 2024. These changes are retroactively applied from January 1, 2024. The legislation provides for qualified refundable tax credits, including job credits and a research and development credit. It also provides for Group Relief and a patent box regime. Companies, except those which are small businesses, are now required to prepay corporate income tax monthly instead of twice a year,” IFCreview states.

Bahamas, which previously did not levy corporate income tax, has also taken the step to comply with the OECD Pillar 2. In 2023, the Bahamas published a Green Paper on Corporate Income Tax Strategies. It has drafted the Domestic Minimum Tax Top-Up Bill, which proposes to introduce a domestic minimum top up tax. . The lower house debated and passed the bill and it is now before the Upper House. The Government estimates that it will boost government revenues by $140 million a year.

Information Source:IFCReview.com, February 18, 2025.

Photo: bms.co.in

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