top of page

News Report: Chamber: CIT must go hand in hand with business license fee reform

Written by Paige McCartney, The Nassau Guardian, May 24th, 2023


Businesses have long lamented inequitable, gross turnover-based business license fees, says BCCEC chairperson


Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Chairperson Khrystle Rutherford-Ferguson said yesterday that the proper implementation of corporate income tax in The Bahamas must go hand in hand with the reformation of the business license process and other forms of taxation.


In a statement yesterday, Rutherford-Ferguson called government’s recently released green paper “Corporate Income Tax (CIT) Strategies For The Bahamas”, a positive step in the right direction in having the conversation on equitable taxation of businesses. The green paper outlines four possible new tax structures for businesses, that will align tax policies with the Organization for Economic Cooperation and Development’s (OECD) Pillar Two rules, to which The Bahamas is a signatory.


“Businesses have long lamented and have been concerned by the inequitable, gross turnover-based business license fees… The current system does not take into account loss-making years that exhaust cash flow to businesses while hampering their ability to grow and expand via reinvesting in the business,” she said.


“Nor does it take into consideration charitable based corporate donations through tax deductions, among other possible incentives. The comments at pages 19 and 20 attributed to the Business Advisory Committee, of which the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) was a member, provides instructive insight into business needs and concerns in this process.”


Pages 19 and 20 of the document note that participants in the Business Advisory Committee were largely enthusiastic about a profit-based CIT over the existing turnover-based business license fee.


It noted “strong support for mechanisms to allow historical losses to be deducted from current profits, whilst keeping design features relatively simple”.


The switch to CIT is a part of The Bahamas’ commitment to implement a 15 percent global minimum corporate income tax by 2024, as a part of the tax policies under the OECD’s Pillar Two rules.


The government has proposed possible models which feature tax structures where CIT is introduced at two different levels for firms, with 15 percent CIT applied to Pillar Two firms and ten percent to all others, as well as a scenario introduces CIT for Pillar Two firms, a 12 percent rate for firms earning more than $500,000 and the existing business license fee (BLF) structure for firms earning less than that amount.


Rutherford-Ferguson highlighted some of the themes in feedback from the business community regarding those possible scenarios, which included ensuring that whatever option selected will not have a deleterious effect on business, but will be equitable.


“The system must not be administratively burdensome or complicated, and ought to lead to the easy compliance of businesses of all sizes,” she said. “There must be an education and awareness campaign that is available to businesses before and during implementation. This will assist in a smoother implementation. Ensuring that there is adequate staffing and resources at the Ministry of Finance and the relevant administrative agency, to implement and operate a CIT regime, able to assist with issues and grievances affecting businesses as they arise in an efficient manner.”


The green paper is out for public consultation until July 3, after which the government has estimated that the policy’s design to take another 12-18 months, with another round of public consultation for 3-6 months thereafter.


Rutherford-Ferguson appealed for the government to seriously consider restructuring the current structure of BLFs in The Bahamas, as a part of an overall tax overhaul to coincide with the implementation of CIT.


“We firmly believe that the success of this process will rise or fall on the strength of the consultation of stakeholders and the government’s ability to use this information as instructive insight for a smooth implementation,” she said.


“One such appeal is to look at the country’s entire taxation system with a view of total reform, including reviewing the existing business license fee, as options include keeping business license fees for some businesses. Finally, the BCCEC urges the policymakers to ensure that not only is tax reform at the forefront, but the ease of doing business is also at the forefront of all discussions.”




49 views0 comments

Comments


bottom of page