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Aerial view of the Island of Bermuda with heading: Bermuda 2025 Tax Reform Commission Public Report

Tax Reform Commission Report 2025

The Ministry of Finance is inviting public feedback on the recommendations of the Tax Reform Commission as set out in the attached Public Report.

The Bermuda Tax Reform Commission’s 2025 report presents a strategic framework for optimizing the country’s tax system following the introduction of the Corporate Income Tax (CIT). The Commission recommends a “waterfall” model for allocating CIT revenues, prioritizing fiscal stability and debt reduction. Key allocations include a Stability Fund to manage revenue volatility and a Debt Sinking Fund. The TRC also put forward recommendations for Tax Credits to support investment in Bermuda's economy.

The consultation period will run from 27 August 2025 to 25 September 2025

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August 27, 2025 - September 25, 2025

The Bermuda Tax Reform Commission’s 2025 report presents a strategic framework for optimizing the country’s tax system following the introduction of the Corporate Income Tax (CIT). The Commission recommends a “waterfall” model for allocating CIT revenues, prioritizing fiscal stability and debt reduction. Key allocations include a Stability Fund ($100M/year) to manage revenue volatility and a Debt Sinking Fund ($200M/year) aimed at halving Bermuda’s $3.2B debt over ten years.

To ease the cost of living and doing business, the report proposes targeted healthcare subsidies for seniors and underinsured individuals, payroll tax reductions for employers and employees, utility tax relief, and eliminating the Foreign Currency Purchase Tax (FCPT).

The TRC also recommended the introduction of refundable tax credits to stimulate economic growth. These include credits for housing development, innovation (e.g., AI and climate tech), and insurance sector investment, all designed to comply with OECD rules.

Additional proposals include a Community Development Tax Credit to support charitable giving and a Utility Infrastructure Tax Credit to encourage investment in essential services.

The report emphasizes the need for strong oversight, data collection, and periodic review. It also suggests exploring a future broad-based income tax to enhance equity and resilience. A re-evaluation of the reforms is recommended after three years to ensure alignment with global standards and local needs.

We encourage members of the public to offer their views on the recommendations of the Tax Reform Commission as set out in the attached Public Report.

The consultation period will run from 27 August 2025 to 25 September 2025.

250822-15914_Tax_Reform_Commission_Report_2025-Final.pdf

(9.0 MB)

6 ideas

Sean Reel7 months ago To the Bermuda Tax Reform Commission,Dear Community,I’m reaching out on behalf of Ignite Bermuda, a charity committed to driving job creation and diversity through entrepreneurship. We’re not a political organization, but we do believe deeply in the power of entrepreneurs to shape Bermuda’s future. In fact, through our work, we’ve helped create 262 jobs right here on the island. We have over 600 members of our community and have secured $16m of investment in local businesses Data shows that 78% of Bermudians believe SMEs make a significant contribution to the economy (Narrative Research 24).Here’s the big picture: by 2030, about 65% of new jobs are expected to come from entrepreneurship. That means investing in the entrepreneurial ecosystem isn’t just a nice-to-have—it’s a must-have if we want to see real economic growth and widespread opportunity. Plus, if we support entrepreneurs now, the returns on that investment could be far greater than just paying down debt, because we’re actually building a stronger, more resilient economy.To really make this work, we’d suggest a couple of practical steps. First, let’s tackle the low levels of incorporation. Right now, about 82% of Bermudians aren’t incorporated, and that’s a barrier. By using the tax credit system to reduce incorporation costs, we could accelerate business growth and create more jobs.Second, we can build a bridge to capital. If the government uses these tax credits to help funnel investment into new ventures, we’ll see even more entrepreneurial activity and a bigger return on investment. In other words, investing in entrepreneurship could give us a far better payoff than just paying down debt.In short, let’s use this opportunity to fuel the entrepreneurial engine of Bermuda’s future. We believe that’s the key to sustainable growth and shared prosperity.We’d welcome further conversations and would love for our community to be part of those discussions.Kind regards,Sean Reel, Executive Director Ignite Bermuda

Calvin Blankendal7 months ago The National Sports Governing Bodies in Bermuda, primarily focusing on the two national sports of Bermuda, are underfunded through annual government grants.The two national sports of cricket and football are a part of Bermuda's sporting and social fabric, which bring the entire island together to foster national pride, maintain our cultural legacies (cricket), and encourage mass physical participation (football).Each year, there is inadequate funding for sport, which is becoming more critical each year, as we face an ever-increasing health crisis. Sports allow all users to offset possible medical complications that can be avoided, such as obesity and diabetes. Sports also encourage our youth to interact with each other, which is becoming less frequent due to the decline in Bermuda's social fabric and overall lack of safety & security.In addition to the above, the two national sports attract volumes of sporting groups and high-level international World Cup Qualifying events, which continue to aid in the marketing and international exposure of the island. Simultaneously, they bring much-needed airlift and hotel room nights to our tourism industry.If we are to be proactive in reducing our medical costs, social fabric, and to encourage our youth to strive for better academic standards, we need to invest in our sporting bodies. The annual budget allocated to sports is insufficient, with an expectation for the national sports to be competitive internationally and to thrive domestically.The return on the government's investment is seeing our youth lead healthier and more respectful lives, a decline in obesity, and type 2 diabetes. Plus, infrastructure upgrades to see more vibrant community centers and sports training centers.If we only focus on seniors and the aging population, the youth will not be able to afford or be eager to provide for the senior population. There must be a balance in funding, and sports has been underfunded since the Hon. Dr. E. Brown retired from office.In closing, one inmate at the West Gate Correctional Facility receives the same amount of funding for their incarcerated welfare and maintenance as the national sport of cricket.I thank you for considering my proposal.

Nicola Paugh7 months ago To the Bermuda Tax Reform Commission,On behalf of the Nonprofit Alliance of Bermuda, I write in strong support of the recommendation in the Tax Reform Commission Report to introduce a Community Development Tax Credit to incentivize corporate philanthropy. Addressing Bermuda’s Unequal GrowthAs outlined in our Corporate Income Tax White Paper Addendum (2023), Bermuda’s economic growth—driven largely by international business—has not translated into shared prosperity across the community. Since 2005, inflation-adjusted incomes for international business workers have increased by over 25%, while frontline workers in sectors such as farming, construction, hospitality, and food service have seen declines of up to 20%. This reality reinforces inequalities, and means that nonprofits continue to provide much of Bermuda’s safety net while experiencing a significant strain on resources. A tax credit for corporate philanthropy will redirect a portion of Bermuda’s economic success towards the Third Sector, helping to support its sustainability. Endorsing the TRC’s Proposed StructureWe endorse the TRC’s carefully considered design for the Community Development Credit, which balances accessibility with an emphasis on impactful giving: 25% credit on annual aggregate donations exceeding the minimum threshold. Threshold of $100,000 average annual charitable contributions over three years, encouraging sustained and substantial giving while avoiding administrative burdens from small donations Eligible donations limited to cash contributions to registered Bermuda charities that provide audited financial statements, ensuring transparency and accountability We believe these provisions strike the right balance: they incentivize larger-scale philanthropy, safeguard the integrity of the programme, and maximize community benefit. Aligning with International Best Practices and Enhancing Bermuda’s ReputationOther advanced economies already employ tax incentives for charitable giving. Implementing this scheme positions Bermuda as a forward-looking jurisdiction that not only fosters economic growth but also ensures that prosperity translates into community well-being. ConclusionThe Community Development Tax Credit is a practical, evidence-based reform that will: Encourage meaningful private sector reinvestment in Bermuda’s communities, Deliver high social and economic returns, and Reduce long-term government costs by addressing issues early and effectively. The Nonprofit Alliance of Bermuda strongly endorses the TRC’s proposed Community Development Credit and urges its adoption. Respectfully, Dr. Nicola Paugh Executive Director Nonprofit Alliance of Bermuda

unknown author7 months ago

Michelle Jackson7 months ago To the Bermuda Tax Reform Commission,I write in response to your August 2025 report, specifically Section 4.2 addressing health insurance initiatives. While you acknowledge that health insurance premiums "can have a similar effect to regressive taxes" (Section 4.2.3), the report’s analysis understates the problem. The "waterfall" allocates $510 million across 11 priorities, yet does not mention the Mutual Reinsurance Fund - a mechanism that extracts over $180 million annually from working Bermudians through the most regressive means possible.The MRF is a Core IssueI appreciate the Commission's proposed 25% employer SPR refund and the report’s recognition that healthcare costs burden our economy. However, these measures fundamentally miss the core issue: the MRF portion of health insurance premiums, which is $376.97 per person monthly, operates as Bermuda's most regressive tax.The MRF is Functionally a Tax, Not InsuranceThe MRF meets every definition of a tax. Health insurers bear zero risk on the portion of premiums they collect for the MRF. They are merely collection agents, no different than employers withholding payroll tax. The government mandates the payment, sets the rate, controls the funds, and provides the benefits. When insurers have no discretion, no risk exposure, and no control over these funds, this is taxation through the insurance mechanism, not true insurance.The MRF does fund critical services - hospital care through BHB, dialysis, and health system oversight. But earmarking doesn't change its regressive nature. Many countries fund similar services through progressive taxation. Why should a minimum-wage worker pay the same dollar amount as a millionaire for our hospital system?The MRF Devastates the Stated Principles of the Tax Reform Commission ReportThe report prioritizes "reducing the impact of taxes on individuals" and "enhancing progressivity" (Section 4.1). The MRF premium of $376.97 monthly ($4,524 annually) is typically split 50/50 between employer and employee. For an employee paying the typical 50% share ($2,262 annually), this represents: 6.5% of income for someone earning $35,000 0.65% of income for someone earning $350,000 This ten-fold difference in effective tax rate makes the MRF one of Bermuda's most regressive levies. Unlike income-based taxes that scale with ability to pay, the MRF operates as a flat "head tax" - historically the most regressive form of taxation.The Double Burden Discourages Job CreationThe regressivity extends to employers: the employer's $2,262 share adds 6.5% to the cost of employing a minimum-wage worker, but only 0.65% for a high-paid executive. This creates a structural disincentive to create entry-level positions which directly contradicts the report’s goal of "reducing the cost of employment" (Section 4.3.10). Even worse, self-employed Bermudians face the full $4,524 burden—a crushing 13% of income for someone earning $35,000.The Numbers Reveal an Opportunity for Greater ImpactThe report’s proposed employee payroll tax reductions (Section 4.3.9.4) would provide welcome relief—$510 annually for someone earning $60,000. However, that same worker currently pays $2,262 in their share of MRF contributions, over four times the proposed payroll tax savings. While your report thoughtfully allocates $24 million for employee payroll tax relief, addressing the MRF's regressive structure could deliver substantially more benefit to these same working families. Rather than choosing between these reforms, imagine the transformative impact of pursuing both—with MRF reform providing more significant relief to those who need it most.The Compulsory Nature Amplifies InequalityBecause health insurance is mandatory and the MRF portion is non-negotiable, our lowest-paid workers cannot opt for more affordable coverage. They face an inescapable tax that consumes a significant portion of their income while barely registering for high earners. Even when generous employers cover the full MRF, this represents a much larger percentage benefit for low-wage workers—highlighting how regressive the underlying structure truly is.RecommendationProgressive tax reform should include: recognizing the MRF as government revenue, implementing a progressive contribution model that exempts the first $30,000 of income with graduated rates of 3-4% above that threshold, and utilizing CIT revenue to address any funding shortfall.Government has pledged to introduce universal healthcare. In the interim, Bermuda can take a meaningful step towards equity in healthcare by funding critical health care services through a more equitable collection mechanism. The first step is recognition: the MRF is a tax, and it's one that places its heaviest burden on those least able to bear it.Respectfully submitted,Michelle Jackson

Jamillah Lodge7 months ago The draft encourages local presence, promotes community engagement, and supports infrastructure investment. However there is limited focus on SMEs, accessibility challenges for entrepreneurs, broad community credit definitions, so there is a potential for large corporations to capture most benefits.Could we: -Introduce SME-focused credits (e.g., Small Business Innovation Credit). Clarify community credit criteria and include entrepreneurial ecosystem support. Incentivize partnerships between corporates and SMEs. (e.g. create a Fund to support new startups that have the potential to increase jobs for Bermudians) Require reporting on measurable outcomes (jobs created, local spend). Provide advisory support to help SMEs access credits. Although Customs Duty may be a separate issue, it is a relevant one for entrepreneurs, especially those in a position to scale and hire more Bermudians. Currently there is a 30% duty on imported goods for resale, including Bermuda-owned brands that are produced overseas. This creates high costs and is a huge barrier to expansion which, reduces competitiveness, and limits job creation.Possible reforms include: Reduced duty rates (10–15%) for Bermuda-registered SMEs. Duty relief for Bermuda-owned brands manufactured abroad and for those brands that sell outside of Bermuda. Deferred duty payments at point of sale instead of import. Customs duty reform should be considered alongside tax reform to lower the cost of doing business, stimulate growth, and encourage local expansion.

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