Bermuda: Treatment of deferred tax liabilities | KPMG | GLOBAL

Bermuda: Budget proposal, consolidation regime’s treatment of deferred tax liabilities

Bermuda: Treatment of deferred tax liabilities

The federal budget includes proposals for broadening the securitised assets rules, removing double benefits from deductible liabilities, and changing the consolidation regime's treatment of deferred tax liabilities.


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The amendments to change the consolidation regime’s treatment of deferred tax liabilities would be accomplished by removing adjustments relating to deferred tax liabilities from the consolidation entry and exit tax cost-setting rules. This change would apply to joining and leaving events under transactions that commence after the date when the amending legislation is introduced in Parliament.

Current law

Currently, there is a commercial-tax mismatch under the consolidation entry and exit tax cost-setting processes for deferred tax liabilities (DTL). A provision under current law, concerning the entry of an entity into a tax consolidated group, requires the joining entity's DTL—on becoming a DTL of the group—to be used at step two of the allocable cost amount (ACA) calculation, rather than the DTL being included in the joining entity's financial statements immediately before the joining time. This potentially requires several iterations of the ACA calculation to determine the most accurate value of what will become the DTL of the group (although administrative short cuts are available in light of the compliance costs).


Read a June 2016 report prepared by the KPMG member firm in Bermuda

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