VAT and Sales Tax in Bermuda

Does Bermuda have VAT or a sales tax?

Bermuda has no value-added tax (VAT), no goods and services tax (GST), and no general sales tax. The Government of Bermuda and PwC's Worldwide Tax Summaries both confirm this explicitly: "There is no VAT or sales tax in Bermuda." [1] Bermuda is a British Overseas Territory that has historically funded public services through customs duties and payroll taxes rather than broad-based consumption taxes, placing it in the same no-VAT category as the Cayman Islands and the British Virgin Islands within the Caribbean region.

Why does Bermuda rely on customs duty instead of VAT?

Bermuda is a small island economy that imports the vast majority of consumer goods, food, building materials, and vehicles. Customs duty — levied at the point of entry by HM Customs Bermuda — naturally captures most consumer spending without requiring a domestic VAT administration infrastructure. Combined with payroll tax (the other major revenue pillar), customs duties allow the government to collect sufficient revenue from a small resident population and a large international business sector. [2] The absence of corporate income tax on domestic profits (a 15% corporate income tax took effect January 2026 only for large multinational groups with EUR 750 million or more in global revenue, in line with OECD Pillar Two) reinforces the structural reliance on trade-based indirect taxes.

What customs duty rates apply to imported goods?

Customs duty applies to almost all goods arriving in Bermuda. The standard rate is 25% of the cost-insurance-freight (CIF) value of the shipment, but rates vary significantly by category. [2] Effective July 1, 2025, the Government of Bermuda reduced or eliminated duty on several categories to lower the cost of living. [3]

All cargo arriving by air or sea also attracts a wharfage fee of 1.25% of CIF value. Returning residents receive a duty-free personal allowance of BMD 300 per landing (raised from BMD 200 effective July 2025).

What tourism and accommodation taxes apply?

Visitors to Bermuda encounter several indirect taxes that hotels and rental operators collect on behalf of the government. [4]

Hotel owners licensed under the Hotels Licensing and Control Act 1969 pay a Hotel Occupancy Tax of 7.25% on total accommodation charges levied to guests, administered under the Miscellaneous Taxes Act 1976. The tax is remitted monthly to the Office of the Tax Commissioner. Diplomatic and consular staff may apply for a repayment exemption.

Vacation rental proprietors and agents pay a vacation-rental fee of 4.5% of the rack rate charged, effective from November 2018. [1]

Passengers departing Bermuda by air pay a departure tax of BMD 35 per person. Cruise-ship passengers pay BMD 20 per 24-hour port period at Hamilton or St. George (maximum BMD 60), or BMD 25 per 24-hour period at Dockyard (maximum BMD 75), applicable April through October. Yacht arrivals are assessed BMD 35 per person. [4]

What is the foreign-currency purchase tax?

Bermuda residents who purchase foreign currency from a local bank pay a 1.25% foreign-currency purchase tax on the transaction value. [1] This applies to individuals and businesses exchanging Bermuda dollars (BMD) for USD or any other currency through a licensed Bermudian bank. Certain exemptions exist, and the tax does not affect routine credit-card transactions that banks settle in foreign currency on a customer's behalf without an explicit currency-purchase instruction. BMD is pegged 1:1 to USD, so the distinction between the two currencies matters primarily for cross-border capital movements rather than everyday purchases.

What is stamp duty and what does it cover?

Stamp duty applies to a range of legal instruments in Bermuda, including conveyances and transfers of property, deeds, leases, mortgages, partnership agreements, and powers of attorney. [5] For the conveyance or sale of land, duty is charged on a progressive scale:

• First BMD 100,000 of value: 2.1%
• BMD 100,001 to BMD 500,000: 3.15%
• BMD 500,001 to BMD 1,000,000: 4.20%
• BMD 1,000,001 to BMD 1,500,000: 6.3%
• Above BMD 1,500,000: 7.35%

First-time homebuyers acquiring property valued at up to BMD 1,000,000 are exempt from stamp duty under 2023 amendments to the Stamp Duty Act. Mortgages valued at BMD 1,000,000 or less may be transferred between lenders without incurring stamp duty.

What are the implications for businesses operating in Bermuda?

The absence of VAT has a structural consequence for businesses: there is no input-tax recovery mechanism. In VAT jurisdictions, a registered business can reclaim VAT paid on purchases used in production (input VAT), offsetting it against VAT collected from customers (output VAT). In Bermuda, customs duty is a terminal cost embedded in the price of every imported input. A restaurant, for example, pays 25% duty on imported cooking equipment and cannot recover that cost through any credit mechanism. The duty becomes part of the cost of goods and is effectively passed to consumers through pricing. [1]

For businesses that rely heavily on imported goods or materials, this can make Bermuda's effective cost structure higher than the headline zero-VAT headline suggests. Import planning, duty classification under the correct HS tariff heading, and eligibility for concession-rate categories (such as building materials at 10% or approved hotel construction materials under Bermuda's Hotel Concession Acts) are practically important considerations. A review of the Bermuda country overview provides broader context on the island's full tax environment, including payroll tax obligations and the new corporate income tax applicable to large multinationals.

Businesses and individuals with significant cross-border activity, property transactions, or tourism operations in Bermuda should consult a qualified tax professional familiar with Bermudian law, as the interaction of customs duty, payroll tax, stamp duty, and (for large MNEs) the new corporate income tax requires jurisdiction-specific expertise.