Global Daily Tax News, Bermuda Progresses Corporate Tax Act Amendments, (Dec 9, 2025)

On December 5, 2025, Bermuda's House of Assembly endorsed The Corporate Income Tax Amendment (No. 2) Act and The Tax Credits Act 2025.

The Corporate Tax Act amendment would implement changes to the nation's regime, introduced in response to the OECD's Pillar Two global minimum tax rate framework, to ensure that the legislation remains consistent with the OECD's Model Rules.

The Bermuda Government has prepared a clause-by-clause explanation of the Act's provisions, with the main amendments being as follows:

• Clause 2 amends section 2 of the principal Act to refine certain definitions and to incorporate clarifications made by the OECD on equivalent definitions under the Model Rules and to ensure consistency with OECD guidance;

• Clause 3 amends section 4 of the principal Act to clarify that only foreign tax credits are relevant for the calculation of tax under the CIT Act, as domestic tax credits are now dealt with separately under the draft Tax Credits Act 2025;

• Clause 5 amends section 10 of the principal Act to align the section with updated OECD guidance by inserting a new subsection (5) that provides for how the borrowing and acquisition of an excluded entity that borrows funds from third parties to make such acquisitions should be treated;

• Clause 7 amends section 18 of the principal Act to align the section with updated OECD guidance by revising the computation of the adjusted creditable foreign taxes;

• Clause 9 amends section 21 of the principal Act to align the section with updated OECD guidance by inserting a new subsection (7) to provide further with respect to the computation of the financial accounting net income and loss of a Bermuda Constituent entity that relate to different financial reporting periods;

• Clause 10 amends section 26 of the principal Act to align the section with updated OECD guidance by repealing and replacing subsection (1) with a subsection that provides a revised method of adjusting the taxable income or loss of a Bermuda Constituent Entity for a fiscal year;

• Clause 11 amends section 27 of the principal Act to align the section with updated OECD guidance by revising the provisions relating to adjustments to financial accounting net income or loss relating to pension expense or income;

• Clause 12 amends section 33 of the principal Act to align the section with updated OECD guidance by inserting a new subsection that provides the calculation of the taxable income or loss of a Bermuda Constituent Entity in relation to stock-based compensation;

• Clause 13 amends section 46A of the principal Act to provide empowerment for the Agency to waive all or part of any interest chargeable pursuant to regulations made under section 52 of the principal Act; and

• Clause 15 amends section 46D to provide further clarification regarding information or documentation required to be filed with the Agency.

Meanwhile, the Tax Credits Bill 2025 would introduce new incentives to promote the territory as a business domicile. The credits will be offered to businesses that invest in their on-island operations, including through new hires; substantially increase spending on domestic goods and services; or donate to charitable causes.

The two Bills must now be signed off by the Senate.