The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government should consider implementing a corporate income tax at a flat 10 per cent rate, a senior Bahamian accountant said yesterday.

Pedro Delaney, a chartered accountant and industry representative on the Bahamas Financial Services Board (BFSB), said Bahamas-based businesses should not be relieved from paying taxes.

Mr Delaney told the Rotary Club of West Nassau that in the Government’s ‘White Paper on Tax Reform’, a flat annual fee of $100 for business licenses was being proposed.

“Based on my discussions with a number of persons, this is an an area that the Government will revisit, and there will be some reconsideration as to what kind of Business License fees and taxes will be introduced,” he said.

“My belief is that with VAT being a consumption-based tax, we ought not to relieve the businesses of paying taxes. It’s my view that it’s time for the country to consider the introduction of a corporate income tax at a low flat rate, be it 5 or 10 per cent, but something. It will simply signify to business that there is a tax to be paid but it will not, in my opinion discourage businesses.”

The Bahamian accountant was effectively picking up where the International Monetary Fund (IMF) had left off in its recent Article IV consultation, that report having urged the Bahamas to implement a simple, broad-based corporate income tax in addition to Value-Added Tax (VAT).

Mr Halkitis recently confirmed that the IMF suggestion related to Business Licence fees.

Mr Delaney who gave a presentation on VAT, which the Government is proposing to implement on July 1, 2014, said the Bahamas’ current tax structure depends heavily on import duties and excise taxes.

“This creates a narrow tax base, taxing only goods and providing an inadequate level of revenue for the Government and the administration of the country,” he said.

“The border tax on goods results in a significant investment in capital and inventory costs by merchants prior to them making a sale of their merchandise.

“The Bahamas expects to accede to the WTO in 2014, and this will inevitably require the reduction or near elimination of border tariffs such as Customs duties and other excise taxes,” said Mr Delaney.

The Government is proposing to implement VAT at a rate of 15 per cent, with the hotel industry subject to a lower 10 per cent rate. The Government is moving forward with the establishment of a Central Revenue Agency (CRA) which will reportedly collect 90 per cent of all taxes.