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New On The Lowtax Network Today
This feed is published daily with selected new or updated
content from across the Lowtax Network. For a list of Lowtax Network
sites, many of which feature daily news, see
below. |
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| TODAY 12/03: Lowtax
Costa Rica, annual update |
| 11/03 Estonia
Summary PBTG Guide, added to Personal Business Tax Guide |
| 10/03 Lowtax
Labuan, annual update |
| 09/03 Word
Search Puzzle, on Lowtax |
| 08/03 Jobs
For All,
Jeremy Hetherington-Gore blog |
| 05/03 Belgium
Summary PBTG Guide,
added to Personal Business Tax Guide |
| 04/03 New
Lowtax Editor Column,
by Kitty Miv |
03/03  Personal
Business Tax Guide, PBTG, has launched!
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| Providing essential tax news and information
for globally mobile artists, contractors, entrepreneurs, professionals,
small businesses, sportspersons and entertainers. |
| 02/03 Personal
Equity Investment In 2010: Not Just For Expats…, Investors Offshore special feature
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| 24/02 Lowtax
Cyprus, annual update
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| 22/02 Lowtax
Brunei, annual update
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| 17/02 Dubai
- A Stately Business Dome Decreed, Investors Offshore special feature
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| 15/02 Lowtax
Australia,
major content expansion
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| 27/01 Lowtax
Germany, major content expansion
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| Direct
Corporate Taxation |
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In 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.
When
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.
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 $66,000 per employee, when it amounts
to $7,920 per employee per year.
Employers
have also been able to recover 4.5%
of the payroll tax from employees (on
their actual salary, not the notional
amount).
In
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 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 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.
Under
the change, firms will face new tiered
rates as follows:
-
13.50%
applicable to: Taxpayers with an annual
payroll greater than BMD1,000,000
and exempt undertakings.
-
12.75%
applicable to: Taxpayers with an annual
payroll greater than BMD500,000 and
up to BMD1,000,000.
-
10.75%
applicable to: Taxpayers with an annual
payroll between BMD200,000 and BMD500,000.
-
9.75%
applicable to: Taxpayers operating
an hotel or restaurant with an annual
payroll of BMD200,000 or greater.
-
7.75%
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.
-
7.25%
applicable to: Employers and self-employed
persons with an annual payroll of
less than BMD100,000. 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.
-
4.75%
applicable to: The Government, Parish
Councils, Government Boards, the Bermuda
College, approved schools, registered
charities, religious and cultural
organizations and the Bermuda Festival
Ltd
Additional
changes to the payroll tax system were
announced in the 2007/8 budget, and
included:
-
an
extension to the period during which
they are charged Payroll Tax at the
reduced rate of 7.75%. The months
of November and March were added to
the current period of December through
February.
-
a
concessionary Payroll Tax rate of
4.75% for start-up businesses in the
Economic Empowerment Zone for their
first 12 months of operation.
Under
the Acts, taxable remuneration is defined
to include various benefits, including
pension contributions, rental value,
profit-sharing, stock option gains,
etc.
Taxpayers
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.
The
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
4.75% of gross remuneration. Self-employed
persons and deemed employees are not
eligible for Special Relief.
'Employer'
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.
Other
tax measures included a 4.75% increase
in social security contributions from
August 2005, (set to be increased again
from August 2008), and customs duty
concessions for the agricultural sector.
Meanwhile,
the estate tax and stamp duty system
is being reviewed and the government
has put forward a proposal to establish
protection from estate tax on family
homes. In addition, land tax for over-65s
occupying their own homes is to be abolished.
With
regard to the financial services industry,
Cox was mindful of the important role
played by international business to
the island’s economy, and described
Bermuda as “a premier international
business jurisdiction of choice”.
“As
a result, we must guard against anything
that erodes our competitiveness or diminishes
our reputation,” Cox went on to
state, although she added that the government
remains committed to introducing international
standards of financial supervision and
regulation.
BACK
TO TOP
Social Insurance
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
pay.
Foreign
(non-Bermudian) employees are covered by the tax,
retrospectively if necessary, if they work for
six months or more in the country.
Employers
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.
Previously,
the social insurance contribution were BMD42.68
per week, BMD21.34 due from each of the employer
and employee.
These
amounts were increased by 4.75% in the 2005/2006
budget.
In
early 2008, the contribution rate stood at BMD56.96
per week, with BMD26.48 due from employer and
employee, but as a result of the 2008/9 budget,
contribution rates are set to increase again,
by 5% with effect from August 2008.
BACK
TO TOP
Filing Requirements and Payment
of Tax
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
in question.
BACK
TO TOP
Health Insurance
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.
Half
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.
BACK
TO TOP
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