By KHRISNA RUSSELL
Deputy Chief Reporter
MONTHS after passing amendments to the Business Licence Act, which angered many in the private sector, the government made a U-turn on the decision by reverting to the former regulations yesterday.
In his defence of the move, Prime Minister Dr Hubert Minnis insisted the decision reaffirmed the government’s commitment to making operating a business easier for Bahamians in their own country.
Dr Minnis told Parliament business owners will now face prompter service and less government bureaucracy.
For his part, Finance Minister K Peter Turnquest said officials realised the practical challenges with the amendments implemented on May 30 regarding the practice of some business owners in commingling business and personal accounts. He advised against the practice, saying there should be separation.
However, before the Business Licence Amendment Act 2018 could be passed there were several heated arguments between government and Official Opposition Members of Parliament. At one point, House Speaker Halson Moultrie was forced to stand to his feet to gain order in the House. In this instance, Elizabeth MP Dr Duane Sands was contributing to the amendment, but was heckled by a seated opposition member.
The amended regulations, which were put into effect almost unnoticed on May 30 amid the general outcry over the budget’s VAT hike to 12 percent, required companies with an annual turnover of $10m or more to provide audited financial statements that will confirm their prior year earnings. Businesses earning less than $100,000 will be exempt from paying licensing fees.
But for those businesses earning between zero to $10m, the regulations stipulate that “a financial statement” confirming their turnover must be supplied to the Department of Inland Revenue (DIR). This, though, also had to be accompanied by “a certified bank statement” covering each bank account held in the business’s name and any other accounts “that are used in transactions” on its behalf.
“As you would recall, the Parliament approved a range of amendments during the recent budget exercise, the aims of which were to provide an enhanced level of oversight on certain matters, while at the same time ensuring that the government advances its ease of doing business initiative, to make it easier for persons to get into business and to stay into business,” Dr Minnis told the House yesterday.
“The most significant adjustment we are proposing is to roll back the planned amendments to the recently passed business licence regulation that would have required audited financials and bank statements. We have determined that given where we are – and the likely need for further reform of the tax system in light of the recently debated legislation around our offshore sector, we will defer these and other planned changes to the reporting regime until such is considered in the broader tax reform effort.
“This will mean that, we shall revert to the status quo before July of this year, which required businesses with a turnover of $100,000 or greater, to submit with their renewal application, a certified statement of attestation, signed by a licenced member of the Bahamas Institute of Chartered Accountants.
“This will ease the concerns raised to me by any number of businesses – particularly small businesses. I do wish to advise though that notwithstanding this revision, the Department of Inland Revenue has been tasked to increase their vigilance, and audit activities, to discourage fraudulent statements. A word to the wise is sufficient: we expect all businesses to file honest, accurate statements – as most reportedly do already. Because the pace and frequency of VAT and other audits will increase,” the nation’s leader said.
“It will be no use to come running to me – or any other politician – if it is found that you are one of those who choose to file incorrect information. Just as importantly, these final set of amendments reaffirm our commitment to making it easier for Bahamians to do business in their own country.”
An amendment was also made to paragraph four of the law and now means that persons filing for a renewal of a business licence does not have to go through the full process of obtaining the regulatory approvals once again from all of the regulators. Before, the government had used the Business Licence Unit as the enforcement arm for all regulators.
“But that simply is not best practice and it served only to frustrate the businesses and the business licence process,” Dr Minnis said. “Thus, this move means that the Business Licence Unit will do its job – which is to license businesses. The regulators will provide the Business Licence Unit with information it has on delinquent licencees before the licencing period, or be required themselves to address the businesses otherwise within the parameters of the law. But the Business Licence Unit will no longer serve as the de facto policemen for these other agencies. They will have to fulfil their own obligations as it should be.”
Dr Minnis said as businesses go in to license their business in 2019, they will face prompter service and less government bureaucracy. The Department of Inland Revenue is committed to ensuring that businesses feel the difference this coming year, he said.
The processes have been streamlined and the department is instituting a game plan to ensure that it can address businesses promptly and reduce the time to get a business renewal, the prime minister told the House.
The provisions that were approved already in June to allow for new businesses to get a “provisional licence” will come on stream early in 2019.
This means that for most simple and straightforward businesses, you will be able to get a provisional licence to begin operation for up to 90 days once you have submitted a completed application.