About the Economic Empowerment Zone Payroll Tax Relief Program
In order to encourage and attract businesses to start up or relocate to an Economic Empowerment Zone (EEZ) – Somerset, North East Hamilton & St.George’s, the BEDC has developed a process for a relief on the employer’s portion of Payroll Tax for newly established businesses in a zone
The purpose of this initiative is to attract new businesses or existing businesses to start-up within or relocate to an EEZ to assist with the regeneration and growth of the zones. It also allows start-ups an opportunity to grow and thrive over a 2-year period while giving them breathing space to grow the business financially through reduced overhead costs. The relief also incentivises existing businesses to be attracted to an EEZ while growing the economic base in those zones.
Any new business or relocated business that establishes a physical presence in one of the 3 Economic Empowerment Zones after the zone’s establishment date as per the relevant order. Further, the business must be registered with the Bermuda Economic Development Corporation.
A Payroll Tax rate of 0% will be offered to newly established businesses in an EEZ on the Employer portion of the payroll tax. The relief is available up to a maximum of 9 tax periods including the period in which the business was established in an EEZ.
Existing Economic Empowerment Zones
There are currently 3 Economic Empowerment Zones in Bermuda as follows:
- The North East Hamilton EEZ – established by the Economic Development (Designation of Economic Empowerment Zone) (North East Hamilton) Order 2007 on June 18th, 2007.
- The Somerset EEZ – established by the Economic Development (Designation of Economic Empowerment Zone) (Somerset) Order 2011 on March 29th, 2011.
- The St. George’s EEZ – established by the Economic Development (Designation of Economic Empowerment Zone) (St. George’s) Order 2011 on March 29th, 2011.
The details of the EEZ Payroll Tax Relief Program are as follows:
Concessionary Payroll Tax Rate
Maximum # of Tax Periods
- BEDC’s Officers conduct site visits to the physical business to confirm the business is actually and legitimately operating in the EEZ.</p.
- BEDC’s Officers will check with the Office of Tax Commissioner; and the Department of Social Insurance; to ensure the business does not have arrears.
- BEDC’s Officers, once satisfied with the information provided, make a recommendation for approval or refusal to BEDC’s Executive Director.
- BEDC’s Executive Director, once satisfied with the information provided, will approve or refuse the application.
- Upon approval BEDC’s Executive Director issues a Payroll Tax Relief Letter to the attention of the Tax Commissioner for the business and the specified employees of the business. BEDC will provide the approval letter to the applicant and email a copy of the letter to the OTC.
- Once BEDC receives all required information and the site visit is completed, the letter can be issued within 5 business days. The letter will only give the tax relief on the employer portion of payroll tax on the remuneration paid to themselves (if owner-managed or self-employed) and any employees for up to 9 tax periods from commencing the business in the EEZ.
- Please note that BEDC does not back date relief, so any tax periods, if missed, from when the business officially opened would be excluded.
- Normally, for the first tax period in which the business receives the relief letter, the applicant must file manually taking the letter to the OTC office.
- Ultimately, it is at the discretion of the BEDC and the OTC, based on the information provided and its own investigations, to determine if the business is eligible to be approved for this relief.
- Once the approval is given, any changes in employees during the 9 tax periods must be reported to the BEDC.
Any new or relocated business that establishes a physical presence in one of the 3 Economic Empowerment Zones after the zone’s establishment date. Further, the business must be registered with the Bermuda Economic Development Corporation.
The BEDC defines a small business as Bermudian – owned and managed; operating locally; having an annual gross payroll not exceeding $500,000 or having annual sales revenues of less than $1,000,000.
The BEDC defines a medium-sized business as a Bermudian-owned & owner-operated business enterprise with at least three of the following attributes:
- Gross annual revenues between $1 million and $5 million
- Annual payroll between $500K and $2.5 million
- A minimum of 11 and a maximum of 50 employees
- In operation for a minimum of 10 years
- Net Assets of less than $2.5 million
Although open to all businesses who meet the criteria, the BEDC desires to expose Bermuda’s small business.
Please ensure that you have reviewed the checklist below and have all the necessary information needed to apply.Complete and compile all information below, BEFORE filling out the application.