Bermuda Tax Evasion Penalties and Fines: Understanding the Consequences

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Bermuda takes tax evasion very seriously, imposing severe penalties and fines on individuals who fail to pay their taxes. In this article, we will delve into the consequences of tax evasion in Bermuda, including refund procedures, penalty fees, and appeals processes.

One-Two Punch: Tax Refunds and Penalties

While discovering a tax overpayment may result in a refund, taxpayers should be aware that refunds are only available for a maximum period of two years from the date of overpayment. To claim a refund, taxpayers must submit a written request to the Office of the Tax Commissioner along with any required documentation.

Refund Timeline

• Maximum period for claiming a refund: 2 years
• Requirements for submitting a refund request:
  • Written request to the Office of the Tax Commissioner
  • Required documentation

Failing to Pay Taxes: Steep Penalties and Fees

Failing to pay taxes or paying them late comes with steep penalties. The penalty fee is equivalent to 5 per cent of the payroll tax due for each month or part of a month that the tax is unpaid or underpaid, capping at 30 per cent.

Penalty Fee Structure

• Penalty fee: 5% of the payroll tax due
• Maximum penalty cap: 30%
• Additional tax equal to the amount of tax owed

Assessed and Charged: Unpaid Taxes

In cases where taxes remain unpaid, the Office of Tax Commissioner may issue what’s known as an “assessment of unpaid tax.” This can result in additional tax charges up to 100 per cent of the unpaid tax. Assessments are retrospective and can cover a period of up to five years, except in cases of fraud or willful default where there is no time limit.

Assessment Process

• Issue of assessment of unpaid tax
• Additional tax charges up to 100% of the unpaid tax
• Retrospective assessments: up to 5 years (except in cases of fraud or willful default)

Appealing Tax Decisions

Taxpayers who disagree with decisions made by the Office of the Tax Commissioner have the right to appeal. Appeals are governed by the Taxes Management Act 1976 – Part IV and the Tax Appeal Tribunal Procedure Regulations 1981.

Appealing a Decision

• Submit a written objection to the Tax Commissioner within 30 days
• Review by the Tax Commissioner with a written explanation of their decision
• Request for review by the Tax Appeal Tribunal (requires payment of an appeals fee, submission of proof of payment, and adherence to specific regulations)
• Either party can appeal the tribunal’s decision to the Supreme Court of Bermuda