Bermuda Budget 2023/2024

Bermuda Budget 2023/2024

Introduction

The 2023/2024 Budget statement was delivered by the Bermuda Premier and Minister of Finance, The Hon. E. David Burt, JP, MP, in the House of Assembly on Friday 17 February 2023.

According to the Premier, also speaking at the Chamber of Commerce’s annual Budget Breakfast event on Monday 20 February 2023 at the Hamilton Princess Hotel, the Budget:

• reflects the path towards continued and sustainable economic growth; 
• will provide tax relief for many workers and businesses;
• projects a further decline in Bermuda’s deficit; and
• also allows for a reduction of gross debt (through the repayment of a $50M government bond that will not be refinanced).

Budgetary context

This year’s Budget is delivered at a time of ongoing international conflict, significant inflation not seen for the last 40 years and disruptions in global supply chains. 

Despite this challenging context, the Premier has expressed hope that Bermuda can look forward to brighter days, citing consecutive quarters of GDP growth attributable to international business, increased visitor spending, higher employment income, greater levels of household consumption and increased construction activity.

According to the Premier, the Government’s focus in the 2023/2024 Budget is now on sustaining growth through economic diversification and by strengthening Bermuda’s core sectors.

Some of the key highlights of this year’s Budget are listed below:

Employer payroll taxes

No business in Bermuda will pay any more in employer payroll taxes in this Budget than last year – i.e. all employer rates will either stay the same or will go down:

• Businesses with an annual payroll of up to $200,000 will see their payroll tax rate move from 1.75% to 1%, reducing their payroll tax liability by 43%.
• Businesses with an annual payroll of $200,000–$350,000 will see their payroll tax rate moved from 3.5% to 2.5%, reducing their payroll tax liability by 29%.
• Businesses with an annual payroll of $350,000–$500,000 will see their payroll tax rate moved from 6.5% to 5.25%, reducing their payroll tax liability by 19%.
• Businesses with an annual payroll of $500,000–$1,000,000 will see their payroll tax rate move from 9% to 7.5%, reducing their payroll tax liability by 17%.
• Businesses with an annual payroll of $1,000,000 or more will see their payroll tax rate move from 10.25% to 10%, reducing their payroll tax liability by 2%.
• Hotels and restaurants with an annual payroll of $350,000 or more will see their payroll tax rate moved from 6% to 5%, reducing tax liability by 17%.
• Exempt businesses will see no increase in tax liability, with their payroll tax rate remaining at 10.25%.

Employee payroll taxes

Employee payroll taxes will be reduced for the fourth time since 2017 for low wage workers.  Any employee making less than $132,000 will pay less payroll tax this year than they paid last year (which captures 86% of Bermuda’s workforce).

The new employee payroll tax brackets will be charged at the following marginal rates:

• For the first $48,000 of income, the employee payroll tax rate will be 0.5%.
• For the next $48,000 of income, the employee payroll tax rate will be 9.25%.
• For the 3rd marginal tax band of income earned between $96,000 and $200,000, the employee payroll tax rate will be 10%.
• For the 4th marginal tax band of income earned between $200,000 and $500,000, the employee payroll tax rate will be 11.5%.
• For the 5th marginal tax band of income earned between $500,000 and $1,000,000, the employee payroll tax rate will be 12.5%.

Maternity and paternity leave

The Government will exempt employers from paying payroll tax on the salaries paid to their employees while on maternity and paternity leave.

Customs duties

The Government will extend customs duty exemptions for investments in plant and equipment to the personal care and personal fitness sectors, and eliminate customs duty on limestone aggregate imports used to manufacture concrete and concrete blocks.

Selective fee increases

The following fees are among those which are set to increase by 5%, in order to support infrastructure investment by the Government:

• Stamp duty.
• Trademark fees.
• Solid waste dumping fees.
• Immigration fees (with the exception of passport fees).
• Planning fees.
• Seaborne shipping fees.

It is estimated that these increases in fees will yield an additional $3.3 million annually for the Government.

Regulatory fee for corporate compliance

The Registrar of Companies will introduce a new corporate regulatory fee, which is planned to be $150.00 annually for local companies and $500.00 annually for other entities.  Such fees are expected to generate approximately $6 million annually for the Government. For further information about the 2023/2024 Budget, please speak with your usual MJM contact.