The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s top financial official yesterday conceded to problems with both Tax Compliance Certificates (TCCs) and Business License fees, agreeing that the latter’s rates “have to be lowered over time”.

Simon Wilson, the Ministry of Finance’s financial secretary, blamed the National Insurance Board’s (NIB) “slow response rate” for delays in issuing TCCs to the private sector, and said the Government had adjusted its processes to compensate.

Addressing the Chamber of Commerce’s State of the Economy 2017 forum, Mr Wilson said he wanted to see Business License and real property tax rates lowered, and the tax base broadened instead.

He was initially responding to Disa Campbell, Bahamas Waste’s chief financial officer, who argued that “very little regard for the impact on the private sector” had been given when the Government implemented VAT and its other revenue reforms.

She added that it “takes two weeks to get a Tax Compliance Certificate that’s good for four weeks”, and complained about the tight deadlines imposed on Bahamian companies to verify their annual turnover for Business License purposes.

Mr Wilson said the Government now required external auditors to sign-off on a company’s turnover because of rampant under-reporting and evasion that had occurred in the past.

“In the old Business License system, there was no verification. You put in whatever you wanted to put, and we accepted it” he added.

“Most people are not honest. I said we had to get income verified. The income verification process has been very successful.”

As for TCCs, which companies must produce to either conduct business with the Government or obtain payment for goods and services already rendered, Mr Wilson said he would “be the first to admit there’s a challenge”.

While all agencies under the Ministry of Finance’s control had no difficulty, he conceded there was “a challenge with the response rate at NIB - it’s not as quick as we’d like”.

Mr Wilson then added: “The other potential challenge is many businesses have arrears - NIB, Business License fees, real property taxes - with the Government.

“For me, it seems sensible that if you’re doing business with the Government you don’t owe me money, and need a TCC. You should really come with clean hands.

“We’ve changed our processes slightly. We realised for some businesses that the process is a problem.”

Mr Wilson said TCCs could be applied for, and obtained, online, with companies also able to “pre-order” the certificates for up to six months.

He reiterated: “My view is that I can’t by law, and I can’t by policy, do business with a business that has no intent of being tax compliant.

“There are some businesses that have no intent to become tax compliant. There are some businesses that call a politician and complain. I’m not a politician; my job is to ensure that the law is enforced.”

Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, then asked whether the Government may be open to a ‘low corporate income tax’ regime, both as a means to shed this nation’s ‘no tax’ image and open up double taxation and investment treaty possibilities.

“Over time, we have to lower Business License fees. Business License fees pose a lot of problems,” Mr Wilson said. “They don’t capture the profitability of businesses properly, and that has to be lowered.”

However, he warned that any move to a ‘low rate’ corporate income tax was some way off, as it “would pose a lot of challenges to us” from a tax administration viewpoint.

“That’s a delicate issue,” Mr Wilson said. “The Government’s tax administration is pretty weak. Even though we’ve done reforms for the past five to seven years, we’ve under-invested in the public sector, and don’t pay the salaries to attract the skill sets we need.”