Repeal of the Bermuda tax reform as the general service tax got denied

Even though the financial regulators of Bermuda had extensive plans regarding the tax reform, a lot has changed since then. Previously, we informed our readers about the implementation of a general service tax, however, it is dismissed from now on.

The 2018\19 pre-budget report declares tax amnesty in controversy to the old plans. This amnesty will consist of a cancellation of late-payment penalties for business. Companies, whose business is regular, will be able to avoid such penalties.

In reference to the previously promised general service tax, plans have changed. There is a possibility of implementing a professional services tax. It is a payment for companies that provide consulting services, such as legal, accounting, business and others. Also, the tax will be limited to the services provided to Bermuda companies only.

A very important part of the tax reform is that the new government is ready to revive existent taxes for now on, as well as to analyze accordance of labor, goods and service taxes to each other. It is planned to balance these taxes and, if needed, add more. Also, the Payroll Tax Act is planned to be updated on the matter of undeclared income. The government plans to add more criteria to identify undeclared incomes and to decrease it.

Worldwide business community challenged Bermuda in various matters. First, Caribbean Financial Action Task Force assessment of Bermuda's anti-money laundering and countering the financing of terrorism regime is an initiative Bermuda is currently working on. Changing legislation for the matters of anti-money laundering and counter the financing of terrorism is crucial for the reputation worldwide. Moreover, the EU now considers Bermuda as a “non-cooperative” tax jurisdiction. This means that 2018\19 plans are very challenging for the Bermuda government. They will have to deal with potential economical threats, like the US lowering corporate taxes, as well as implementing new rules and bringing jurisdiction’s economy to a higher grade.

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