TRC Mandate & Principles
According to the Tax Reform Commission Act 2017, the function of the Tax Reform Commission (the “TRC” or “Commission”) is to examine Bermuda’s tax system and to advise the Government of any measures that may be taken to best enable a system of taxation and revenue collection that is equitable, effective, efficient, competitive, and transparent.
The purpose of this document is to set out the Mandate and key principles that will guide the recommendations of the TRC.
Mandate
The TRC has been tasked with incorporating the potential revenues that may accrue to the Government of Bermuda due to the implementation of the Corporate Income Tax Act 2023 (“CIT”); and to make policy recommendations to the Government for the establishment of a revised Bermuda tax system that achieves the following objectives:
- To complement the CIT by making recommendations on how Qualified Refundable Tax Credits, and other permissible tax reductions or incentives might be implemented to ensure that CIT payers continue to contribute to and find Bermuda to be a fiscally attractive
- To revise the tax system to enhance Bermuda’s competitiveness from local and international perspectives.
- To reduce the impact of taxes on the cost of living and the cost of doing business in Bermuda.
- To broaden and balance the tax base, reduce the variability of revenues given the CIT, and consider alternate forms of taxes.
- To consider how the Government’s revenue and reserves management can be improved and to recommend appropriate changes/guardrails to Bermuda’s founding instruments such as the constitution, legislation, and/or policies.
- To engage and build trust with stakeholders to support the design and acceptance of the TRC policy recommendations.
Principles
The following principles, listed in order of importance, are those that the Commission will use to guide its work and in making recommendations:
- Appropriate government revenues. Bermuda’s tax system should be designed and operated in a manner that produces sufficient funding to meet Government’s commitments, both external to Bermuda (e.g. debt holders) and internal (e.g. operational services, infrastructure on the island, long-term liabilities such as pensions, and innovation etc.) This funding must be of a certain level of predictability as well as being consistent and reliable, to enable planning, budgeting, and the provision of regular quality services for Bermuda.
- The tax system must support (within its scope) Bermuda’s Jurisdictional Competitiveness for both local and international capital investment, local and international people to live and be attracted here, and be a positive factor (amongst others) in enabling a society that can peacefully prosper. Our competitiveness will need to be achieved within the constraints of continually evolving international investor and regulator expectations.
- Equity and fairness. The tax system must be reasonably transparent, fair, and This includes achieving an appropriate balance of revenues across labour, capital, and services, as well as an appropriate level of progressiveness. Similarly situated taxpayers should be taxed similarly, and tax burdens should reflect the ability to contribute and encourage the desire of residents to work, invest, and grow economic activity.
- Simplicity. The tax system must be efficient and cost-effective for Government to administer and relatively straightforward for taxpayers to navigate without an undue burden of complexity, costs, and bureaucracy.
Our recommendations will likely create tradeoffs amongst these principles. We will seek to strike a coherent balance that overall, is an effective enabler for Bermuda to sustain itself over the long term.
Deliverable
A set of recommendations and findings addressing the mandate by the end of 2024 with interim reporting on any proposed Qualified Refundable Tax Credits during the summer.