Bermuda: local rules

Bermuda has no general transfer pricing act. The rule is section 37 of the Corporate Income Tax Act 2023 (the CIT Act), which taxes in-scope MNE groups at 15% (s.4) for fiscal years beginning on or after 1 January 2025. A group is in scope if it has consolidated revenue of at least EUR 750m in at least two of the four preceding fiscal years (s.11) and a Bermuda tax resident entity or permanent establishment. Section 37(1) says a transaction between a Bermuda Constituent Entity and a group entity in another jurisdiction that is not consistent with the arm's length principle must be adjusted to it. The Act defines the principle as using the conditions independent enterprises would have agreed in comparable transactions. Section 37(2) says a transaction not recorded in the same amount by both sides must be adjusted to the same amount, and s.37(3) recomputes gains and losses on asset transfers between two Bermuda entities at arm's length. Tax is charged on the Bermuda Constituent Entity Group, and every Bermuda Constituent Entity of the in-scope group is jointly and severally liable for it (s.4(3)). The CIT Agency (CITA) administers the Act under the Corporate Income Tax Agency Act 2024.

Bermuda has no master file, local file or transfer pricing documentation rule in the CIT Act, the Administrative Regulations or the CITA guidance read for this research. The group makes the s.37 adjustments in its CIT return and must keep books and records that support every item in the return for 5 years after filing (Administrative Regulations reg 27). CITA can open an enquiry into any return item (regs 29 to 31) and can assess within 4 years of the due or filing date, with no limit for fraud or no return. The official guidance (Guidance Notes General, 8 October 2026, part 17) only says that no s.37 adjustment is needed for the opening tax loss carryforward, because the cost of reviewing old intercompany deals would be too high. Keeping a normal transfer pricing study is still sensible, because it can help to show reasonable cause or substantial authority if CITA questions the return.

The CIT Act and the CITA guidance do not list transfer pricing methods and do not mention the OECD Transfer Pricing Guidelines. The Act only defines the arm's length principle and requires adjustments to match it. The CITA guidance also says that the Act is similar to the GloBE Rules in many places but that those rules and their commentary are not part of the Act unless it says so. In practice a group will use the usual OECD style methods, but this is practice and not a stated rule. The arm's length adjustment applies to transactions with group entities in other jurisdictions and to asset transfers between two Bermuda entities. The rule that both sides must record the same amount applies to all group transactions. An election lets Bermuda Constituent Entities of the same group eliminate transactions between them as in consolidation (s.37(4) and (5)).

Civil penalties are in Part 8A of the CIT Act. Failing to register: up to USD 10,000 (s.46C). Failing to file a return: the greater of USD 3,000 or 5% of tax due for each of the first five months, then USD 3,000 a month (s.46D). Failing to file instalment forms (Form 001) or other required information: USD 3,000 a month until it is filed or the return is filed. Understating tax through negligence, disregard or a substantial understatement: up to 20% of the understatement, which is reduced where there was substantial authority or adequate disclosure, and removed for reasonable cause and good faith (s.46E). Failing to pay tax: 0.5% of the tax due for each month (s.46F). All group entities are jointly and severally liable, and CITA must first send a warning notice with 28 days to respond. Criminal offences cover deliberate failure to file for over six months (fine up to USD 5m or 6 months, s.46H) and tax evasion (fine up to 100% of the tax or up to 5 years, s.46I). CbC failures carry a civil penalty up to USD 4,000, a USD 200 a day penalty on unpaid penalties, USD 5,000 for known inaccurate data, and an offence with a fine up to USD 10,000 or 6 months.

The Bermuda CIT is Bermuda's response to Pillar Two, but it is a stand-alone 15% income tax, not a qualified domestic minimum top-up tax (QDMTT). The CIT Act does not enact the GloBE income inclusion rule, UTPR or a QDMTT, and its own wording treats the s.4 tax as an income tax next to a separate mention of QDMTTs. CITA's guidance says many Act provisions are like the GloBE Rules but the GloBE Rules are not part of Bermuda law. The tax uses a GloBE-like base (financial accounting income with adjustments, a 5 year loss carryforward and an economic transition adjustment) and the same EUR 750m revenue test. Because it is not a QDMTT, the QDMTT safe harbour does not apply, so countries that apply an IIR or UTPR to the group still run the GloBE calculation for Bermuda. The Bermuda tax should count as a covered tax there, so top-up tax arises only if the Bermuda effective tax rate under the GloBE Rules is below 15% (for example because of tax credits or base differences). No Bermuda GloBE Information Return or top-up tax notification was found, so there is no separate Pillar Two filing in Bermuda. The filings are the CIT return, two instalments and the final payment. Do not use the 15 or 18 month GloBE timing here: the Bermuda return is due at the end of the tenth month after the fiscal year end. Whether the 2026 OECD side-by-side package changes how other countries treat this tax was not checked.

CIT registration goes through CITA Online. The filing entity registers at least 10 days before the first instalment, and other entities at least 90 days before the original return due date. A group pays two instalments during the year (the last day of the 8th month and the 15th day of the 12th month of the fiscal year), then the balance by the return due date, all in US dollars. No instalments are due if the year tax is under USD 10,000. A de minimis election gives zero tax if average revenue is under EUR 10m and average net taxable income is under EUR 1m (s.7). Under Administrative Regulations reg 5(3), a deadline that is not a business day (Saturday, Sunday or a Bermuda public holiday) moves to the next business day, and CITA publishes dates that way (for example 2 November 2026 for 31 December 2025 year ends). Bermuda public holidays are in the Schedule to the Public Holidays Act 1947. CbC reporting is separate, under the International Cooperation (Tax Information Exchange Agreements) Act 2005 and the 2017 CbC Regulations: the Bermuda ultimate parent notifies by the last day of the fiscal year and files within 12 months, and a Sunday or public holiday (but not Saturday) moves the date under the Interpretation Act 1951 s.9. The Economic Substance Act 2018 is a separate regime with its own declaration, due six months after the end of the relevant financial period according to CITA, and it is not shown as a filing here. The Corporate Income Tax Agency Act 2024 and the Tax Credits Act 2025 are also part of the regime, and CITA has consulted on more amendments in 2026.