Bermuda, as a significant offshore financial centre, plays a critical role in international tax compliance for multinational enterprises (MNEs). While not a member of the OECD, Bermuda has committed to the OECD’s Base Erosion and Profit Shifting (BEPS) initiative, including Action 13 on Country-by-Country Reporting (CbCR). This guide provides Chief Financial Officers (CFOs) and financial executives with a detailed overview of the CbCR requirements in Bermuda, including applicability, filing procedures, penalties for non-compliance, and useful resources.

Applicability of CbCR in Bermuda

Criteria for Reporting:

• MNE groups with consolidated group revenue of €750 million or more in the preceding fiscal year are required to submit a CbC report.
• The reporting obligation typically falls on the ultimate parent entity of an MNE group that is a tax resident in Bermuda, or on a surrogate parent entity under specific circumstances.
• If the Bermuda-based entity is part of an MNE that meets the threshold but has a parent company located outside Bermuda, the CbCR obligation may fall on the parent company, depending on the laws of that jurisdiction.

Relevant Legislation:

• The legal framework for CbCR in Bermuda is established under the International Cooperation (Tax Information Exchange Agreements) (Country-by-Country Reporting) Regulations 2017, which align Bermuda’s regulations with the OECD’s BEPS Action 13.
• These regulations are available through the Bermuda Government Legislative Database.

Reporting Requirements

Information to be Reported:

• The CbC report must include high-level data on the global allocation of income, taxes paid, taxes accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents.
• The report must also include details on all constituent entities within the MNE group, identifying their tax jurisdictions and main business activities.

Form and Submission:

• The CbC report should be submitted in the standard XML format, as prescribed by the OECD.
• The report must be filed electronically through the Bermuda Ministry of Finance’s Tax Information Reporting Portal.
  • More information on the filing system and procedures can be found on the Bermuda Ministry of Finance website.

Filing Deadlines

• The CbC report must be submitted within 12 months from the end of the MNE group’s fiscal year. For example, if the fiscal year ends on 31 December 2023, the CbC report must be filed by 31 December 2024.

Penalties for Non-Compliance

Penalties:

• Failing to submit a CbC report, submitting inaccurate information, or failing to keep adequate records can result in penalties.
• Financial penalties may include fines up to BD$250,000 (Bermudian dollars).
• In cases of deliberate non-compliance, criminal penalties, including imprisonment, may also be imposed.

Defences:

• Entities may be exempt from penalties if they can demonstrate reasonable cause for non-compliance or errors in the reporting.

Confidentiality and Use of Information

Data Protection:

• Bermuda adheres to strict confidentiality protocols regarding the information submitted in CbC reports. The reports are exchanged with foreign tax authorities only in jurisdictions with which Bermuda has a competent authority agreement in place.
• The information is used solely for risk assessment purposes related to transfer pricing and base erosion, in line with OECD guidelines.

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