Small Business Tax in Bermuda

Do small businesses pay income tax in Bermuda?

No. Bermuda does not impose a corporate income tax, personal income tax, or capital gains tax on ordinary small and medium-sized businesses. The Corporate Income Tax Act 2023 introduced a 15% rate effective 1 January 2025, but it applies exclusively to Bermuda-based entities that are members of multinational enterprise (MNE) groups with consolidated annual revenues of EUR 750 million or more across all group members. The Office of the Tax Commissioner has confirmed explicitly that "Bermuda businesses that are not within the scope of the newly enacted Bermuda CIT will continue to not be subject to income tax in Bermuda." ¹ A family-run restaurant, retail shop, or professional practice incorporated in Bermuda falls entirely outside that threshold and owes no income tax.

What does a small business in Bermuda actually pay?

Four recurring obligations apply to most local small businesses.

Payroll Tax is the most significant. Every employer, self-employed person, and deemed employee in Bermuda must account for payroll tax on remuneration paid for services rendered in Bermuda. The tax has two components collected together: an employer portion (a flat percentage based on total annual payroll) and a progressive employee portion withheld from each worker's pay. For the April 2026 to March 2027 tax year, the employer rate for an annual payroll under BMD 200,000 is 0.5%; payrolls between BMD 200,001 and BMD 350,000 attract 2.00%; and payrolls between BMD 350,001 and BMD 500,000 attract 4.75%. The rate rises to 7.00% for payrolls between BMD 500,001 and BMD 1,000,000, and 9.50% for payrolls above BMD 1,000,000. Payments fall due quarterly on 15 January, 15 April, 15 July, and 15 October; employers with annual remuneration exceeding BMD 200,000 must file online at etax.gov.bm. ²

Social Insurance contributions are mandatory for all employees over 18 who work more than four hours per week. The current combined weekly contribution is BMD 75.30, split equally: BMD 37.65 from the employer and BMD 37.65 deducted from the employee. A self-employed business owner pays both portions personally, for BMD 75.30 per week. ³

Annual Company Fees are due to the Registrar of Companies each year. Local companies (those incorporated for trading primarily within Bermuda) file annual returns by 31 March. The registration portal at registrarofcompanies.gov.bm provides the current fee schedule, which was updated in 2023 to reflect expanded economic-substance and anti-money-laundering compliance obligations. ⁴

Customs Duty applies to goods imported into Bermuda. The most common rate on general merchandise is 25%, though specific categories carry different rates. A business that imports inventory, equipment, or materials will encounter this cost directly; it is a real operating expense that owners factor into pricing. ³

Business licence fees apply in regulated sectors (hospitality, food service, financial services). The amount depends on the activity and is set by the relevant ministry or the Bermuda Monetary Authority.

How does payroll tax apply to the owner of a small business?

Owner-operators who draw a salary or other remuneration from their company are subject to payroll tax on that remuneration just as any other employee would be. The employee portion is progressive: the first BMD 48,000 of annual remuneration is taxed at 0.25%; the band from BMD 48,001 to BMD 96,000 at 7.75%; from BMD 96,001 to BMD 200,000 at 10.75%; from BMD 200,001 to BMD 500,000 at 11.50%; and from BMD 500,001 to BMD 1,000,000 at 12.50%. Individual remuneration is capped at BMD 1,000,000 for tax purposes. Dividends up to BMD 20,000 per person per year are deductible and not treated as remuneration for payroll-tax purposes; amounts above that threshold are brought in as remuneration. ² A qualifying employer that hires a new full-time Bermudian employee may also be eligible for new-hire payroll-tax relief during the relief period, reducing the employer's cost of expanding the team.

What is the 15% Corporate Income Tax, and does it affect a local small business?

The Bermuda Corporate Income Tax Act 2023 (CITA 2023) implements the OECD Pillar Two Global Anti-Base Erosion (GloBE) framework domestically. It imposes a 15% rate on the Bermuda-sourced income of entities that belong to an in-scope MNE group: a multinational enterprise group whose consolidated annual revenues equalled or exceeded EUR 750 million in at least two of the four fiscal years immediately preceding the current year. ⁵ Practically, this targets global corporations such as international reinsurers, holding companies, and large technology firms with Bermuda subsidiaries.

A locally owned restaurant, construction firm, professional practice, or retail business does not meet this threshold. It remains entirely outside the CIT. Bermuda introduced the CIT in response to global minimum-tax pressure, not to tax its own resident small-business community. Businesses unsure of their group structure should consult a qualified tax professional.

What is the 60/40 ownership rule for local companies?

A local company -- one incorporated to carry on trade primarily within Bermuda -- must maintain at least 60% Bermudian beneficial ownership of its shares, at least 60% of total voting rights held by Bermudians, and at least 60% of its board of directors comprising Bermudians. This rule stems from the Companies Act 1981 and exists to preserve economic participation by Bermudian residents in the local economy. ⁴ A company that cannot meet the threshold may apply for a ministerial licence under section 114A of the Companies Act 1981, which grants an exemption subject to conditions. The licence application fee is BMD 2,100, with an issuance fee of BMD 1,000 and an annual renewal of BMD 1,000.

Exempted companies -- which conduct business primarily outside Bermuda and are typically owned by non-Bermudians -- are exempt from the 60/40 rule by design, but they generally cannot trade locally without ministerial approval.

How does a small business register in Bermuda?

All companies must register with the Registrar of Companies, which administers the Companies Act 1981. The process is conducted online at registrarofcompanies.gov.bm: create a user account, select the company type (local company, exempted company, or LLC under the Limited Liability Company Act 2016), complete the application forms, and pay the applicable registration fee. After incorporation, new employers must register for payroll tax and social insurance with the Office of the Tax Commissioner ([email protected] or +1 441 444-1781) and register employees for social insurance with the Department of Social Insurance (socialinsurance.gov.bm). Annual declarations to the Registrar and quarterly payroll-tax filings to the Office of the Tax Commissioner are the ongoing compliance milestones. ⁴

Bermuda's tax profile is distinctive but not complicated for most small businesses: a business with a modest payroll, no global revenue approaching EUR 750 million, and goods-import activity can expect payroll tax, social insurance, company fees, and customs duty as its complete tax footprint. A qualified tax professional can advise on the specific numbers given a particular payroll structure, sector, and import mix.

For a country-level overview of Bermuda's wider tax and regulatory environment, see the Bermuda country overview.