The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has agreed to the formation of a ‘Tripartite Working Group’ that will assess the Business Licence fee and its rate structure, an initiative the private sector hopes will eventually cover “all tax matters”.

Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, told Tribune Business last night that he hoped to ultimately “institutionalise” co-operation between the Government and private sector.

He added that the Bahamas would “be much further ahead” in striking a balance between the Government’s revenue needs and the ‘ease of doing business’ had such collaboration already been in effect.

“The Government has agreed to somewhat of a Tripartite organisation of the Chamber of Commerce, Bahamas Institute of Chartered Accountants (BICA), and the Ministry of Finance to start talking through certain tax matters,” Mr Bowe revealed to Tribune Business.

He explained that it would start out as “a working group” focusing on the Business Licence, assessing the tax itself plus the associated rate structure and certification process.

“Hopefully, we’ll have it extended into all tax administration matters,” the Chamber chairman added. “We’ve said that should expand.

“Every journey begins with one step. We had movement on VAT with collaboration, movement on energy with collaboration, and the collaboration with the Ministry of Financial Services on the Trade Services desk should hopefully be the next one.

“If we are able to start institutionalising collaboration between the Government and the private sector, we will be far further ahead, as we would achieve a balance between the Government’s tax needs and the private sector’s administrative needs. Hopefully, we can still strike that balance between the two.”

Mr Bowe confirmed that the Government, through the Ministry of Finance, had discussed its proposed 2016-2017 Budget measures and content before unveiling them in the House of Assembly.

“Hopefully, it’s the start of an initiative to discuss tax matters in a more mature manner, with canvassing and soundings taking place leading into it [the Budget],” he added.

The Business Licence fee came into the spotlight earlier this year, after the Government sought to bring the deadline for filing and payment forward from end-March 2016 to end-January.

It eventually relented, and moved the deadline back to the former date, after the Chamber, BICA and numerous individual businesses warned that end-January was simply impractical - and impossible to meet - from an accounting perspective.

The BCCEC has also been lobbying the Government to raise the turnover threshold, above which a business must have its top-line revenues certified by an accountant, from $100,000 to $400,000 on the grounds that the current requirements unduly burden small businesses.

The Business Licence fee has long been a controversial tax for the private sector, as it is based on top-line turnover, not profits. It benefits low turnover, high profit margin companies, while penalising high turnover, low margin businesses such as food stores and gas stations.

And, in many cases, what companies pay in Business Licence fees to the Government often exceeds their annual profits.

Mr Bowe, meanwhile, joined others in backing the Government’s objective of tightening tax compliance through the legislative reforms unveiled with its 2016-2017 Budget.

However, he echoed concerns over the methods the Christie administration has selected, and questioned whether these threatened to over-burden companies that were already tax compliant.

The Chamber chief also queried whether the Government had thought through the impact of the proposed reforms on the private sector, and how they would work in practice.

“It certainly is a positive sign that the Government is seeking to tighten tax compliance,” Mr Bowe told Tribune Business. “We’ve gone too long as a country in accepting that there are going to be tax avoiders and persons avoiding their fair share of taxes.

“But we have to be mindful we do not over-complicate, and attack the very tax base that is paying.”

Describing the Government’s proposed measures as akin to “a one fell swoop net”, Mr Bowe said it could not have one set of policies for compliant taxpayers and another for delinquents.

“When we’re starting to implement new initiatives, there has to be further analysis of wether we are further burdening taxpayers, and will it have the effect of capturing the non-payers,” he added.

Tribune Business revealed earlier this week how the Government’s demand that businesses provide Tax Compliance Certificates (TCCs) to obtain payment on goods and services ALREADY supplied was provoking ‘push back’ from some in the private sector.

Mr Bowe confirmed that the Chamber had “raised the legality of certain things” the Government proposed to do, and “whether it was comfortable from a legal perspective” with some of the measures, when the two sides met pre-Budget.

He suggested that the Government needed to distinguish between refusing to do business with non-compliant companies, and declining to pay firms for goods and services already provided to it.

“Coming into a business entity and changing the rules for goods and services already incurred, you have to be very careful that you’re not going against what is prescribed by law,” Mr Bowe said.

“You have to be mindful you capture the tax dodgers, not the compliant.”