In December 2023, Bermuda enacted a new corporate tax law, which will become effective on 1 January 2025. The new law provides rules on the determination of tax loss carryforward and offset rules.

Under the new law, tax losses of Bermuda constituent entities that form part of an in-scope MNE group under the GloBE rules can be carried forward indefinitely. However, the amount of tax loss that can be offset against the net taxable income in subsequent tax years is limited to 80% of the net taxable income (before loss carryforward deduction) of the group for each subsequent tax year.

The filing Bermuda constituent entity (i.e., the entity that will file the corporate tax return in Bermuda on behalf of the Bermuda constituent entity group) may opt to reduce the amount of the loss offset for any fiscal year. The balance of unutilized tax loss can be carried forward indefinitely to subsequent years. The filing Bermuda constituent entity must allocate the opening tax loss carryforward, if any, to the other Bermuda constituent entity members of the group for the purposes of tracking each Bermuda constituent entity members’ share.

In general, the tax loss carryforward applies to losses generated after 30 September 2023. However, where an entity does not elect to have an economic transition adjustment (an option to increase or decrease the value of assets and liabilities (excluding goodwill) as on 30 September 2023 to its fair value), the tax loss carryforward may include losses incurred in 5 tax years preceding the cut-off date.

Carryback of losses to offset any net taxable income earned in prior fiscal years is not allowed.

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