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Puerto Rico's International Insurance Center: A Strategic Opportunity for Bermuda Insurers Facing New Tax Challenges


The recent passage of the Bermuda Corporate Income Tax Act of 2023 has brought significant changes to the taxation landscape for multinational enterprise (MNE) groups based in Bermuda. With a 15% corporate income tax (CIT) now applicable to businesses with annual revenues of €750 million or more, Bermuda's reputation as a tax haven has been altered. In response to these changes, Bermuda-based insurance companies are exploring alternative jurisdictions, and Puerto Rico's International Insurance Center emerges as a promising solution.

Puerto Rico's Attractive Tax Regime:

One of the key attractions for Bermuda insurers eyeing Puerto Rico is the territory's favorable tax regime for international insurers. Puerto Rico offers a preferred income tax rate of 4%, applicable to the net income of international insurers, with the first $1.2 million of such income being fully tax-exempt. This presents a significant advantage compared to the newly imposed 15% CIT in Bermuda.

The Shift in Bermuda's Tax Landscape:

Historically, Bermuda has been known for its lack of taxes on profits, income, dividends, or capital gains. However, the introduction of the CIT marks a departure from this long-standing tradition. MNE groups now face the challenge of navigating the complexities of the new tax system, including understanding the computation of taxable income and the implications of the tax itself.

Puerto Rico as an Attractive Alternative:

In light of the changes in Bermuda's tax landscape, Puerto Rico's International Insurance Center presents a compelling alternative for Bermuda-based insurers. The combination of a low tax rate, tax exemptions on initial income, and strategic election options positions Puerto Rico as an attractive destination for businesses seeking to optimize their tax structure.


As Bermuda-based insurance companies face the challenges of increased taxation following the enactment of the Bermuda Corporate Income Tax Act, exploring international alternatives becomes imperative. Puerto Rico's International Insurance Center, with its favorable tax regime and strategic advantages, emerges as a promising solution for insurers seeking to maintain competitiveness and financial resilience in an evolving global tax landscape. The decision to relocate operations is complex, and insurers should carefully consider the long-term benefits and implications of such a strategic move.

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