The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A prominent Bahamian accountant yesterday urged the Government to reconsider its proposal to reduce all Business Licence fees to a flat $100 rate, arguing that such a move would “fly in the face” of achieving equality in taxation policy.

Philip Galanis, managing partner of HLB Galanis, said he had written to the Government on the proposal, arguing that it would be a mistake to virtually eliminate Business Licence fees that generate about $94 million in Government revenue annually.

Speaking with Tribune Business at a Bahamas Institute of Chartered Accountants (BICA) conference on Value Added Tax (VAT), Mr Galanis said: “I believe that the Government would be making a mistake to reduce the Business Licence fees, because Business License fees represent about $94 million in revenue to the Government.

“That represents about 5 per cent of the total revenue, and if the plan is to do that, I think it will fly in the face of one of its primary objectives, which is equality of taxation.”

Mr Galanis added:”I say that because it would mean that professionals such as accountants, lawyers, doctors, engineers, architects and other professionals will not pay their fair share of taxes, which is really in my opinion what a Business Licence is.

“The Government would have to make up that $94 million, and it would also then exempt a group of persons from paying taxes that are really, in my opinion, valid, fair and equitable. I have encouraged the Government in writing to seriously reconsider that with a view to ensuring that VAT is not only fair but seen to be fair to everyone.”

  As part of its tax reforms, the Government is proposing that all Bahamian companies pay a flat annual Business Licence fee of $100 - the same sum that companies with turnovers of $50,000 or less pay now. The only sectors exempt from the reduced Business Licence fee will be banking and insurance, where the tax structures will remain unchanged.

The Government is proposing to implement a Value Added Tax (VAT) on July 1, 2014, at a rate of 15 per cent, with the hotel industry subject to a lower 10 per cent rate.

The Government is estimating that implementation of a Value-Added Tax (VAT) will generate a $100 million net increase in its annual revenues, with the new tax generating equivalent to 2 per cent of Gross Domestic Product (GDP). It will also have to compensate for the elimination of Business Licence fees and the hotel occupancy tax.

    Speaking with Tribune Business on the Business Licence issue, John Rolle, financial secretary in the Ministry of Finance, said: “In the White Paper I think the opening proposal is that once a VAT is introduced, a $100 fee should be applied for a Business Licence.

“I think what we have been hearing in a lot of the comments is that the Government should look very carefully as to how it structures Business Licence fees under VAT as opposed to sticking to the $100 as a flat fee. There have been comments in terms of how you can revisit it.”