The Non-Profit Alliance of Bermuda welcomes possible tax credits to companies that donate to local charities.
A government statement said the Tax Credit Act, discussed in the House of Assembly on Friday, involves “substance-based tax credits in the insurance sector, utilities infrastructure credits and community benefit credits”.
The Tax Reform Commission proposed these credits in its annual report earlier this year.
The statement said credits aim to promote “investment that results in increased employment in Bermuda and increased job opportunities for Bermudians, as well as increased expenditure on domestic goods and services”.
It added: “Support is also provided for local infrastructure development and to recognise and encourage meaningful charitable contributions to the community.”
The commission proposed offering a 25 per cent credit to donors who contributed $100,000 annually, averaged over three years, to a Bermuda registered charity.
Nicola Paugh, executive director of the alliance, said these credits are important, as many local organisations have reported a decline in corporate giving.
She said: “It is understandable that companies that once gave generously, in part because they were not taxed, may reduce their giving now that they are subject to corporate income tax.
“For that reason, it is essential that the CIT framework includes strong, accessible tax credits for philanthropic giving.”
However, Dr Paugh still anticipates less corporate donations despite the credits, saying: “An already strained non-profit sector will face growing pressure unless other funding sources can close the gap”.
She added: “Foundations have stepped up significantly, but they are unlikely to be able to fill it fully.
“As Government uses corporate income tax revenues to reduce debt and move towards a balanced budget, it will need to play a larger role in sustaining and investing in the third sector.”
The government statement said: “The substance-based tax credits are structured as refundable tax credits to align with similar provisions in the global minimum tax rules.”
Wayne Furbert, the Acting Minister of Finance, said: “This represents the first step in an ongoing process of implementing changes in the tax framework to improve economic and social outcomes within Bermuda following receipt of the Tax Reform Commission report.”
MPs also discussed amending the Corporate Income Tax Act to align with global regulations.
The law was enacted in 2023, but amended this year to allow the Minister of Finance to delegate certain responsibilities to the Corporate Income Tax Agency.
The statement said: “As part of the continued evolution of Bermuda’s international tax framework, the Corporate Income Tax Agency will assume additional international tax responsibilities currently managed by the Registrar of Companies.
“This transition will occur following the necessary legislative and organisational reviews and marks the next step in the planned evolution of the CIT Agency.
“This integration is designed to bring all international tax matters into one place and underscores Bermuda’s commitment to global best practices and international standards.”
Mervyn Skeet, the CIT Agency chief executive, represented Bermuda at the Organisation for Economic Co-operation and Development headquarters in France this month.
He said: “These responsibilities are part of the long-term vision … this transition ensures a more consistent approach to international tax issues and supports Bermuda’s reputation in a global environment.”
The transition will take place in coming months and further details will be provided in due course.
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