Bermuda – introduction of corporate income tax
The Bermuda Corporate Income Tax Act 2023 (Act) came into force on 1 January 2025. The Act introduces a corporate income tax (CIT) of 15%, aligning Bermuda with international tax standards, particularly the Organisation for Economic Co-operation and Development’s Global Anti-Base Erosion Model Rules. While targeting multinational enterprises (MNEs) with substantial revenues, the legislation also seeks to balance Bermuda’s economic appeal with compliance requirements.
CIT does not apply to all Bermuda entities. In-scope entities include (i) MNEs with consolidated annual revenues exceeding EUR 750 million in at least two of the preceding four fiscal years; and (ii) Bermuda tax resident entities and permanent establishments of non-resident entities operating within Bermuda. Entities such as investment funds, non-profits, pension funds, and certain insurance structures are excluded from the CIT regime. There are also specific exclusions for international shipping income and some ancillary activities. Certain smaller operations that do not meet specified thresholds may qualify for exemption. To avoid double taxation, foreign tax credits are allowed for foreign taxes paid, capped at the 15% CIT rate. However, U.S. GILTI and Subpart F inclusions are excluded. The Corporate Income Tax Agency is established to oversee the CIT regime, including tax filing, compliance, and enforcement.
All businesses with Bermuda entities are recommended to take immediate action to evaluate whether the revenue threshold for CIT regime is applicable and if so, whether any exclusions or exemptions apply. Where necessary, professional advice should be sought on tax planning, reporting liabilities and other compliance aspects.
The new Bermuda corporate income tax regime represents a transformative shift, integrating Bermuda into the global tax framework while imposing new obligations on affected businesses. For Asian businesses with Bermuda structure, the regime underscores the importance of robust tax planning, compliance readiness, and alignment with international tax practices. By proactively addressing these challenges, businesses can navigate the complexities of the CIT regime while maintaining their competitive edge in the Asian market.
BVI – update on company law and beneficial ownership regime
A number of changes have been introduced in the BVI which took effect on 2 January 2025. Most of these changes seek to address recommendations made in the Mutual Evaluation Report of the Caribbean Financial Action Task Force and in response to commitments made by the UK’s Overseas Territories to the United Kingdom.
Amendments to the BVI Business Companies Act (BCA) and related regulations are administrative in nature concerning record keeping and filings aspects. Some of these which are most relevance to businesses in Asia include (among others):
- a company’s register of members must now be filed with the Registrar of Corporate Affairs (Registrar) but this remains a private document and is not available via public searches;
- companies whose shares are being held via nominee structure or which engage licensed professional directors are now required to maintain registers containing certain information and to provide the same to the regulators where required;
- companies are now required to collect, keep and maintain adequate, accurate and up-to-date information on their beneficial owners (being defined as natural persons ultimately owning or controlling 10% or more of the companies or exercising control over its management), which must be filed with the Registrar with 30 days of incorporation (for new entities) or by the end of the transition period (for pre-existing entities), with any subsequent changes to be filed within 30 days, such information being kept private at this stage; certain exemptions apply to BVI company shares listed on a recognised exchange and to BVI registered or recognized funds; a public consultation on access to the beneficial ownership register was launched on 17 January 2025 and stakeholders are invited to provide feedback by 28 February 2025;
- a general extension has been granted to all companies with a 31 December 2023 year end, which now have until 30 June 2025 to file their annual return before the Financial Services Commission takes any action;
- certificates of good standing will only be issued by the Registrar if a company has filed its register of directors, register of members and beneficial ownership information with the Registrar, and its annual return with the registered agent; such certificates will now also bear an expiry date;
- new requirements apply to applications to continue out of the BVI to prevent companies from trying to avoid pending regulatory requests or legal proceedings;
- interested persons may apply for rectification of a company’s register of directors by the court; and
- companies are now under an express duty to cooperate with regulators who have been granted additional enforcement and information-gathering powers.
In summary, shareholders and directors of BVI companies should be aware of the aforementioned amendments, particularly in relation to information required to be submitted under the new beneficial ownership regime. Although certain information has already been collected as part of the existing AML or Beneficial Ownership Secure Search System (BOSS) regime, the amendments extend the information to be submitted to the Registrar, and the BOSS portal is expected to be phased out. Some of these amendments (and related exemptions) apply equally to other BVI entities such as limited partnerships and regulated funds. BVI entities are expected to be asked by their registered agents to provide any requisite information where required and should act accordingly to avoid any delay in compliance.
Cayman –
The Cayman Islands also brought about a number of amendments at the start of 2025, including increases in certain fees of the General Registry and the Cayman Islands Monetary Authority (CIMA). Annual CIMA fees were to be paid by 15 January 2025; given the late notice for the fee increases, so long as the 2024 level fees were paid by this date, CIMA will allow for the increase to then be paid by 17 February 2025, failing which penalties will be assessed. Businesses are advised to review and ensure timely payment of requisite fees as advised by their registered office services providers.
Key changes have been made to the filing of suspicious activity reports (SAR) as required by the Cayman Islands Financial Reporting Authority (FRA). In addition to filing a SAR, consent from the FRA is now required to secure a defence against money laundering offences. Failure to obtain the FRA’s consent prior to carrying out a relevant act could result in conviction and the imposition of statutory penalties, including fines and/or imprisonment. Note that once the SAR is filed, the FRA will have 7 working days to respond, failing which the applicant will be deemed to have obtained consent. The FRA expects that related regulations will be published for industry consultation shortly. In the meantime, businesses should take appropriate steps to review and put into place policies and procedures to assess and process any risk or potential claims.
The Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024 (LIA Regulations), which were published on 9 December 2024 and will come into force on 28 February 2025, set out the framework for certain members of the public to apply to the competent authority to request access to beneficial ownership information, relating to a legal person. The Beneficial Ownership Transparency (Access Restriction) Regulations, 2024, which were published on 9 December 2024, set out the framework for beneficial owners to apply to the competent authority for protection from their information being disclosed to the public under the LIA Regulations where they believe that information relating to them, if disclosed, will place them at serious risk of kidnapping, extortion, violence, intimidation or some other similar danger or serious harm.
The Virtual Asset (Service Providers) (Amendment) Act, 2024, enacted on 11 December 2024 and expected to come into force by commencement order, introduces significant updates to the existing regulatory framework governing virtual asset service providers. Amendments include the introduction of new definitions to align with evolving industry standards. Other amendments aim to enhance the power and authority of CIMA in relation to supervision, licensing, registration, inspection, enforcement and other related aspects. These comprehensive amendments seek to strengthen consumer protection, align local regulations with international standards, and ensure robust oversight of the virtual asset ecosystem in the Cayman Islands.
Please reach out to your usual Appleby contacts for further information on any of the updates in these jurisdictions.
