Economic Empowerment Zone Payroll Tax Relief

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

A concessionary Payroll Tax rate of 0% will be offered to newly established businesses in an EEZ on the Employer portion of the payroll tax

Maximum # of Tax Periods

The concession is available up to a maximum of 9 tax periods including the period in which the business established in an EEZ

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.

Completed Application Form

A fully completed application form with required documents must be received by BEDC two (2) weeks prior to the end of the payroll tax period the applicant is applying for to allow BEDC adequate time for review and processing. Application due dates are as follows: For tax period January to March, applications must be received by March 16th; For tax period April to June, applications must be received by June 16th; For tax period July to September, applications must be received by September 16th; and For tax period September to December, the application must be received by December 16th.

Branch Information

Only if the business is a branch office of an established business with other locations elsewhere on the Island, a signed and completed “EEZ Payroll Tax Concession – Employee Reporting Form” must be submitted. The EEZ Employee Reporting Form lists the names of all employees who will work in an EEZ location (and other branch locations), but who performs a substantial portion of their duties in an EEZ. This substantiality criterion means that during the tax period, the employee in question performed over 50% of their compensated work from/out of the business or branch office physically located in the EEZ. If the branch office has its own Payroll Tax ID Number, this step or form does not apply, and the regular tax reporting process prevails.

Payroll Tax ID Letter

A copy of the Payroll Tax ID Letter from the Office of the Tax Commissioner (OTC). If the business has not yet registered with the OTC, then it will have to do so through this process. If the business is not operating yet, then no letter from the OTC is needed at this point;

Employees

The list of employees (and associated posts) employed with the business.

Social Insurance

The Employer Social Insurance ID Letter from the Department of Social Insurance with the associated Social Insurance numbers for each new employee.

Utility Bill

A copy of a utility bill (or similar document) showing the name and address of the EEZ business since operating.

Location of Business

A copy of the signed lease agreement that certifies the business’ location in the EEZ and lease commencement date;

Identification

Clients are required to demonstrate that the applicant is Bermudian. Applicants must submit a copy/image of their ID for confirmation. If non-Bermudian is a partner, the Bermudian must hold the controlling interest and a copy of the partnership agreement must be submitted.

Register Your Business

Visit the BEDC Member Registration page to fill out your business profile. Completing this form to the best of your ability will help us to better service your needs.

Log-in to Our Business Portal

Once you have received your BEDC Member #, Business Register #, and Vending License # (if applicable), please take a moment to log in to your new BEDC Member Account via the BEDC Member Portal. You can now apply for BEDC products & access our resources.

Processing Application

Once your application is submitted, it will be reviewed by our administration team for completeness and then forwarded on to an officer for processing. At this time the officer assigned to your case may ask you to provide further details or clarification in reference to your application.

Submit Business Profile

Submit your Business Profile. Once you hit submit, one of our officers will vet your information and add it to our register. You will then be given your BEDC Member #, Business Register #, Vending License # (if applicable). This can take up to 2 business days.

Submit Application

Navigate to EEZ Payroll Tax Relief Application Form in the BEDC Member Portal. Fill out the application form, supplying us with all information and documents required. Before beginning your application, please take note of the product checklist that outlines all information needed in order to process your application.

Application Approval

After your application has been processed, it will be submitted for approval. If your application is approved you will be notified, the product will be issued to your account and funds will be disbursed (if applicable). *Applications will be processed within 15 business days of BEDC receiving of ALL necessary information and requirements.

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