The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has moved to alter the Business Licence fee process for companies whose financial year-end is not the same as the calendar year, in a bid to counter non-compliance and ease the path to quarterly payments by 2015.

Simon Wilson, the Ministry of Finance’s deputy financial secretary, yesterday said via e-mail that the new practice notes for such businesses had been finalised with Bahamian accountants and “only impact a small portion of licensees”.

He was responding to Tribune Business inquiries after private sector sources informed this newspaper about the Government’s emphasis on Business Licence fees being calculated on a company’s calendar year turnover, not their financial year’s turnover.

While most businesses have financial years that match the calendar year, there are many that do not, and the Ministry of Finance has issued ‘practice notes’ to deal with how such firms calculate their Business Licence fee.

“The notes seek to clarify a practice that some licencees have adopted recently and, as your sources correctly point out, is not consistent with the Act,” Mr Wilson told Tribune Business.

“These notes were shared with all of the major accounting firms prior to be finalised and represent a consensus of industry feedback.......

“As for the impact on the business community, these practice notes impact only a small portion of licencees. Most licencees pay Business Licence on a calendar year basis, and for those this note has no impact.”

Mr Wilson added that companies that pay their Business Licence fee based on unaudited revenues, then adjust this once the audited financial statements are completed, would also not be impacted.

In its notes, the Ministry of Finance reiterates that companies with a different financial year-end than December 31 still have to submit a certification of turnover for the 12 calendar months to ensure their Business Licence is renewed by March 31 of the following year.

Then, once such companies receive their annual financial statements, they have to pay any difference in Business Licence fee due by June 30 the following year.

Tribune Business understands that the Ministry of Finance has become concerned that several companies falling into this category have not been “coming back” to pay the difference between the ‘certification’ and audited financial statements.

“Businesses, which now pay their Business Licence fees based on their financial year instead of the calendar year, are still required to submit a certification of their annual turnover for the year ending 31 December, 2013, before 31 March, 2014, to facilitate licence renewal,” the Ministry of Finance notes say.

“If the financial year of the business is different from the calendar year, the difference between the assessed tax as per the certification and the business’s annual financial statements would have to be paid before June 30, 2014, to avoid the possibility of interest penalty.”

The insistence that all Business Licence fees be calculated based on the calendar year is part of a ‘bigger picture’ move by the Government.

“This change in process is designed to facilitate moving to a quarterly system of Business Licence payments for businesses with a turnover of $1 million or more commencing with the calendar year 2015, as provided for in the 2013 amendment of the Financial Administration and Audit Act,” the Ministry of Finance said.

“For the avoidance of doubt, it is not the intent that businesses should pay Business Licence fees on turnover for the same period more than once or that turnover for any period should go untaxed.”

Tribune Business sources, though, have expressed concern about whether the change will cause “cash flow issues” for impacted companies, and if such firms will have to file for periods longer than 12 months.

They are also questioning whether the Ministry of Finance, and the Government, are changing or reinterpreting the Business Licence Act.