The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private sector is seeking “across the board consistency” in tax policy application, after the real estate industry became the latest sector to raise Business License-related concerns.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chief executive, disclosed to Tribune Business that realtors were complaining about Business License fees being assessed on Common Area Maintenance (CAM) fees.

These are charges typically levied on tenants, such as companies in an office block, to help finance the upkeep of corridors, staircases, lifts, entrance-ways and other spaces used for the common good.

Mr Sumner told this newspaper that since CAM charges did not represent revenue, they should not be included when calculating a company’s gross turnover for Business Licence purposes.

He added that realtors were also complaining that they were now being asked to apply, and pay for, their own individual Business Licenses even though they worked for a company that already paid the annual fee.

Confirming that the Chamber was “seeking to address these concerns”, Mr Sumner said: “The real estate sector complained that they are being charged Business License fees on CAM charges for their renewals.

“They’re not fees, they’re not revenue, so Business License fees should not be applied to CAM. And brokers holding individual [real estate] licenses now have to apply for individual Business Licenses, even though they operate under a firm with a Business License.

“We’re looking at that to determine if that’s the reality and, if so, what the Chamber can do about that.”

Mr Sumner said a further concern reaching the Chamber was that some businesses are “apparently being asked to file their land use renewal applications” to government, an exercise that should be done every two years, in conjunction with their Business Licenses.

Clarity and simplicity are vital to the smooth functioning of every nation’s tax regime, and Mr Sumner said the Chamber was determined to address all anomalies - for the equal benefit of both private sector and government.

“We want to make the process more consistent, not only for the business community but the regulators and those on the Government side, taking away some of the discretionary decision-making by those in authority that doesn’t seem consistent,” he told Tribune Business.

“The information given must be consistent across the board. Consistent in regulations and in practice. It should not be where regulations and policy are left to the discretion of anyone. Those are issues we are currently working on.”

With Tuesday representing the end of January, and the deadline for submission of all Business Licence renewal applications, Mr Sumner said the Government had agreed to the same approach/timelines that was negotiated with the private sector in 2016.

While renewals are due within the next 48 hours, the payment of Business Licence fees, together with the independent accountant’s report and certification verifying turnover for all businesses generating more than $100,000 per annum, and all supporting documents, are not required until end-March 2017.

“It’s provided a bit of breathing room for businesses trying to recover from Christmas,” Mr Sumner said, adding that the Chamber was continuing to pursue wider reforms to the Business Licence regime with the Government.

“Our greater concern is not just the filing period, but the entire Business License regime as far as having it amended and what the other options are that are more palatable for the business community, where it can stay in business longer and not just be in business to pay taxes,” Mr Sumner told Tribune Business.

“These are things that we have had on the table, and continue to press and have discussions with the Government on. These were not pulled out of the sky. They were discussed in the VAT debate two years ago. All we’re calling on is the promise and guarantee by the Government at the time to reconsider the Business License tax if they hit their [VAT] targets.”

The Government’s 2013 VAT ‘White Paper’ called for reducing Business License fees to a nominal $100 annually for all companies, regardless of size, once the new tax was introduced.

The Christie administration subsequently said it would examine Business Licenses once it was confident VAT is generating the necessary revenue. With more than $1 billion in gross receipts generated during the latter’s first 21 months, VAT has to-date far exceeded the Government’s revenue projections.

The private sector has long argued that Business Licence fees represent one of the most inequitable and regressive forms of Bahamian taxation, given that they are calculated as a percentage of gross turnover rather than profits.

This has resulted in many companies paying more in Business Licence fees than they earn in annual profits. And it has resulted in high turnover, low profit margin businesses such as food stores and gas stations, plus those impacted by price controls, like auto dealers, paying considerably more than low volume, high profit margin companies.