Bermuda Payroll Tax: Fill & Download for Free

Countries with "territorial" tax systems only tax residents on income earned within the borders of the country. Foreign earned income and foreign-source investment income is generally not taxed. An incomplete list of countries with territorial tax systems include: Costa Rica, Hong Kong, Panama, Seychelles, Singapore, Taiwan.Some additional countries have no personal income tax. (They rely on consumption taxes, import tariffs, property taxes, etc, although some do have payroll taxes on domestic salaries). An incomplete list of countries with no general income tax include: Andorra, Anguilla, Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Monaco, Nevis, Turks and Caicos Islands, United Arab Emirates, Vanuatu.

That is a good question! You should have a read through this article Charts Only: 2018-2019 Bermuda Budget - Bernews. It references the government budget, but provides a quick visual overview.This chart, from that article should answer your question -You might note that there is no pie slice for income tax. Bermuda does have a payroll tax, which is equivalent to a flat tax on earned income. The rate varies from 0–15%, depending on the size of the company. The employer is entitled to deduct half of that from an employee’s earnings.

Bermuda has an efficient tax system that functioned beautifully until around 2006. That’s nearly a 400 year run - during which Bermuda had no national debt. And despite debt, the government hasn’t gone broke yet!The Premier and government of 2006 made a conscious decision to borrow to address social issues. The civil service size and rate of capital spending was increased while the tax structure remained (roughly) the same. When a worldwide recession happened instead of anticipated economic growth, government expenses and commitments rose while the tax system has yet to catch up.Unfortunately it is an accepted fact that the current level of debt is not sustainable under the existing tax regime. There will be increases, and a number of new taxes.The point is that in the past taxing standard of living but not personal or corporate income has worked VERY well for Bermuda.It is possible for a person to moderate their lifestyle, but as individuals particularly as working class and middle class individuals it is not easy to control arbitrary rates of income tax. If you are wealthy in Bermuda, you voluntarily pay the highest taxes. If you are poor, you pay some tax but very little on basics and necessities. Historically that was the concept. It has worked very well for four hundred years. Relatively recently taxes have become more income based than consumption based, but Bermuda has managed to avoid a progressive income tax and also to avoid a value added or sales tax. Payroll taxes and customs duty are much more efficient, simply because fewer people and fewer transactions are involved in collecting the revenue and the taxes are unavoidable.People who tend to the social or progressive side of politics will point out that consumption taxes and flat payroll taxes fall disportionately on the least wealthy. That said, the poorest and working class do not have a direct tax on income. Moderating lifestyle can allow savings and investment and enables upwards economic and social mobility. If you spend all your earnings, you live hand to mouth the same way you would anywhere else, but if you save and invest you do very well as your extra income and investment income is not taxed.The truth is, in the current economy, at lower levels of income you probably need a working spouse to be able to live and save money. Honestly, the first rung of the economic ladder has become harder and harder to reach. Many people work two or more jobs to make ends meet. In the past saving and investing was easier. Recession - we hope - won’t last forever.The result of this style tax system is that many working class Bermudians make significant investments in rental properties and other savings mechanisms. Many retire very well off to homes in the USA, Canada or the UK, or live out their retirement on the island. Retiring abroad is attractive because a significant portion of the cost of living in Bermuda is taxation, and as an isolated island things tend to be very expensive. Onshore a much smaller part of the cost of living is tax and economy of scale makes for an overall lower cost of living. On a fixed income that makes moving off of the island attractive.Another result of this system is that many wealthy people from around the world come to Bermuda to volunteer to pay the highest taxes of anyone in the country.The economy has enough strength to afford a modest social safety net for people who can’t make it on their own. So over all, the Bermuda tax method works.It is a time tested system. Around the world similar systems exist in Saudi Arabia, Kuwait, Andora, Monaco, Cayman, Turks & Caicos, the Bahamas, Qatar, Brunei and the British Virgin Islands.__________________More detail? How does it work? Why is it efficient?Tax collection points are at the dock/airport for duty. That is particularly efficient as a very small staff collects over 20% of government revenue. All goods coming into Bermuda for local consumption have a Customs Duty attached to them, financed and paid “upfront” by the importer. Bermuda - Import Tariffs gives the detail. The scheme is tailored to duty necessities at a zero or low rate and luxuries at a higher rate. Typically rates are between zero and thirty three percent. Automobiles are an exception. Private passenger vehicles are normally dutiable at the rate of 75% on the first $10,000 and 150% on the value in excess of $10,000. There are exemptions for electric, hybrid and commercial vehicles.Payroll tax is the largest contributor - again - particularly efficient as the front end accounting is done by Employers, and the number of auditors/collectors is relatively small compared to an individually reported income tax. Essentially, the payroll tax is the same as a flat percentage income tax on earned income. There is some relief at the bottom end of the scales. Typically the tax is about 15% on companies that employ people. It is paid based on the employee’s income, and the company is allowed to deduct about half of that from the employee’s earnings. There are more details to go with that. You can look the specifics up on the Bermuda Government’s page on Calculating Payroll Tax.There is a land tax on real property ownership at about the same levels as property taxes in similar sized cities around the world. The Land Tax website shows the rates. The tax rate is based on the annual rental value of a house, rather than the capital value.There is a social insurance plan that also counts as a payroll tax. All employers must contribute $71.84 per week per employee to the fund, and can deduct half of that from the employee’s earnings. Contributions are recorded by employee, and a certain number of weeks employment entitles employees to a pension of about $1000/mo at age 65. See the government Social Insurance website for details.There is also a compulsory contributory pension plan, but that really doesn’t count as a tax. It is more of a forced savings plan. It just feels like a tax. That spares Government from having to support people in their retirement years. See Employer Information for details.Corporations are required to pay an annual tax, based on their authorized capital. See this page to understand the tax paid by companies. There is also a fee/tax to incorporate a company.There is a landing tax for arrivals, and an occupancy tax for hotel guests. See Passenger Taxes. Oil and gasoline have a significant tax associated with them.Most government services, such as automobile and driver’s licenses, passports, etc… have a fee attached to them.And there is a form of near-universal health care. It is compulsory that employers offer health insurance to their employees, and they may deduct half of the premium from their earnings. Again, it isn’t actually a tax, it is more of a forced benefit plan. It just feels like a tax, and it avoids government having to raise taxes to fund medical care. Those without jobs can buy insurance at discounted rates from Government, or the welfare system will buy it for them. See HIP and FutureCare Benefits.Other taxes are collected at single points, by a very small staff. The Registrar of Companies and the Transport Control Department are examples.Bermuda’s most recent economic report is available online, as is the budget report for the upcoming year.Total Revenue of the Government of Bermuda, for 2017 was $1,089.9 millionCustoms.....................235.0 millionPayroll Tax.................454.0Companies Fees ..........68.5Land Tax......................78.3Passenger Tax .............25.0Vehicle Licences..........30.4Stamp Duties...............23.0Hotel Occupancy….......11.0Immigration ................16.5Foreign Currency...…...22.0All Other..........….........126.1