Bermuda Tax and Duty
No wonder so many International Business have either shifted their head quarters in Bermuda or have set up new operations here.
There are thousands of expatriates who apply for jobs in Bermuda to get benefits of both high earnings and no income tax. Having said that, cost of living in Bermuda is one of the highest in the world. Because there are indirect taxes and duties.
Import tax is quite heavy in Bermuda. Almost everything in Bermuda is imported including food. So in effect prices are high in Bermuda and the Cost of living in Bermuda is far higher than many other countries.
As per the Bermuda tax law, following are all the direct and indirect taxes that are levied on working individuals or businesses as applicable. The tax and duty rates given below are indicative and can change from time to time.
Bermuda Payroll Tax
Bermuda payroll Tax is actually levied on the employer. This is a tiered tax that is calculated based in the total annual remuneration paid out to the employees. It can be as high as 14% for those companies whose total payroll size is over $1M, and as low as 5.75% for approved schools, colleges and other government and religious bodies. Payroll taxes are to be paid out annually by the employer at the time of tax returns.
But if you are an employee, your employer will recover some part of the payroll tax from your salary which averages to about 5.25% subject to a present salary cap of $750,000. This is applicable for both Bermudians and non-Bermudians working in the island.
Update February 2012: Premier of Bermuda Ms. Paula Cox mentioned in her budget statement that Payroll Tax concession in Hotel, Restaurant and Retail sectors will continue. There is no payroll tax for these sectors at present.
Bermuda Customs Duty
Customs duties in Bermuda are levied on almost all goods arriving in the island. It's a major source of government revenue. There are some relaxation for the tourists though.
If you have taken up a job and relocating to Bermuda, almost all belongings that you bring in to take up residence are charged at 25% of assessed value, and that includes electronic and electrical goods like laptops, digital cameras, DVD players etc. Plus there is a 1.01% wharfage fee imposed. Books, used clothes and software packages are not charged. Duties are also waived on hotel construction materials. Check out Bermuda Customs Duty for details.
If you own a property in Bermuda, you will need to pay the land or property tax. Non-Bermudians can buy only top-end properties and at a price far higher than what a Bermudian would get it for, and usually cost in millions.
The tax amount is assessed based on an Annual Rental Value (ARV) of the property and has 6 bands or tiers. In the lowest band which is up to an ARV of $11,000, the land tax is 0.6%. For the highest band (of ARV over 110,000), one needs to pay a land tax of 19.2%.
This is a six monthly tax and has to be paid twice in a year.
Bermuda Stamp Duty
Stamp duty in Bermuda is applicable on legal instruments like in case of property deeds, affidavit of property, agreement, bonds etc. where you will need government stamps for authentication. The rate of stamp duty varies for various instruments.
For example, for conveyance or transfer on sale of land, on the first $100,000 of the value the rate is 2%, on the next $400,000 of the value, it's 3%, on the next $500,000 it's 4%, on the next $500,000 (over $1,000,000 but not exceeding $1,500,000) duty is 6%, thereafter 7%.
Bermuda Timesharing Tax
There are two types of Time Sharing Taxes in Bermuda - Service Tax and Occupancy Tax.
Timesharing Services Tax is charged on the managing agent of a timesharing property. It's a percentage of the membership and maintenance fees charged to clients for operational and maintenance costs of the timesharing scheme. The tax is charged at the rate of 5% and is payable on a monthly basis.
Timesharing Occupancy Tax is charged on the developing owner of a timesharing property. It's a percentage of the purchase price of each timesharing interval. The tax is chargeable on the initial purchase and the resale of each interval. The tax is charged at the rate of 10% and is payable within a specified period of the sale/resale of each timesharing interval.
Bermuda Hotel Occupancy Tax
Hotel Occupancy Tax in Bermuda is charged to the hotel owners. It is calculated as a percentage of the rack rate, i.e. total charge made by a hotel to its guests for accommodation and includes meals where a separate charge has not been made. The tax is charged at the rate of 7.25% and is payable on a monthly basis.
Bermuda Foreign Currency Tax
The foreign currency tax in Bermuda is applicable for the residents and is charged as a percentage of the foreign currency purchased by a resident from a local bank. Payment must be made at the end of every calendar quarter at the rate of 1% of foreign currency purchased.
Bermuda Passenger Cabin Tax (for cruise ships)
The passenger or cruise cabin tax in Bermuda is charged to the owner of the cruise line. This is generally passed on to the passengers by the cruise line as part of the overall cruise package. The tax is calculated based on the number of passenger cabins on a ship and the number of nights during which the ship is docked or anchored in Bermuda.
The rates vary by the time of the year. Here are the current rates for Bermuda Passenger Cabin Tax per cabin and per night:
May 1 to August 31: $14.00
September 1 to October 31: $10.00
November 1 to April 30: Nil for non listed ships
November 1 to April 30: $10.00 for Schedule 2 ships
The tax needs to be paid out by the cruise line to Bermuda Tax Commissioner within 7 days of departure.
Bermuda Passenger Departure Tax (Aircraft)
Although the passenger departure tax in Bermuda is levied to the owner of Airline for every departing passenger, this is squarely passed on to the passenger as part of the overall ticket fare. There are exceptions in case of children under 2 years, transit passengers and in some other cases. A tax of $35 is charged for every departing passenger.
Bermuda Yacht Arrival Tax
The Yacht Arrival Tax in Bermuda is charged to the owner of the arriving yacht. Presently $35 is charged for each passenger arriving by the yacht.
Bermuda Corporate Services Tax
Corporate Services Tax in Bermuda is charged on a provider of corporate services (who can be individuals, or partnership firms or companies). The tax is levied at 4% of gross earned revenue derived from an exempted undertaking to which, or on behalf of which, corporate services are provided.
Tax payment to be done in every period of three calendar months commencing on the first day of April, July, October or January.
Bermuda Betting Duty
Betting Duty in Bermuda is charged on all bets made, received or negotiated by a person. The person must be licensed under the Betting Act 1975. The licensed persons generally include bookmakers or pool betting agents who negotiate bets.
The duty is charged at the rate of 20% on all bets. The duty must be paid on bets received or negotiated during the course of the week, upon close of business at the end of that week, or as soon as practicable thereafter.
1) Check out Bermuda Jobs to know all about job scene in Bermuda.
2) Check out Bermuda International Business to know about why it's flourishing in the island and who are the major players.
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