Bermuda Proposes Tax Credits to Offset 15 Percent Corporate Levy for Insurers and Reinsurers

Reinsurance Business has reported on Bermuda's release of draft legislation introducing tax credits to accompany its new corporate income tax regime. The article, "Bermuda releases tax credit plan for re/insurance sector," was written by Kenneth Araullo and details the Ministry of Finance's proposal, which is now open for public consultation. 

According to the article, the credits include a substance-based tax credit for insurers and reinsurers, a community development tax credit, and a utilities infrastructure tax credit. The consultation paper highlights that the initiative is intended to encourage industries central to Bermuda's economy to expand local investment, especially in ways that create jobs for Bermudians. 

Per the article, the substance-based tax credit will apply to insurance and reinsurance groups registered with the Bermuda Monetary Authority that derive more than half of their revenue from insurance activities. The credit is linked to employment and local expenditure, with greater benefits for companies that hire Bermudians, provide training, or expand their workforce. Additional credits are available for local spending on offices, tangible assets, utilities, professional services, and training. 

The article said the insurance and reinsurance industries—key contributors to Bermuda's economy—are expected to be the most affected by the new 15 percent corporate tax. The substance-based tax credit is designed to mitigate some of this impact while incentivizing firms to expand domestic employment and local supplier use rather than relying on outsourcing. 

According to Reinsurance Business, Premier David Burt stated that the new tax credit legislation is part of broader reforms. He emphasized that the credits are aligned with global tax reform and provide additional incentives for companies to grow their presence in Bermuda. 

Per the article, Bermuda's re/insurance sector has registered 41 new companies so far this year, surpassing the pace of 2024, when 63 were recorded by year-end. Much of this growth stems from insurance-linked securities, captives, and life reinsurers, underscoring the sector's continued momentum despite new tax measures. 

According to the article, Bermuda's regulatory framework has reinforced its role in the global run-off market. Per the article, PwC reported that global non-life run-off reserves have reached USD 1.129 trillion, with Bermuda continuing to serve as a leading hub for legacy transactions and attracting substantial new capital.