‘Discretion’ In Name Switch Tax Dodgers Clamp Down


Tribune Business Editor


The government has introduced “discretion” into the crack down on corporate tax cheats who seek to evade their liabilities by reincorporating under a different vehicle or name.

Proposed changes to the Financial Administration and Audit Act, tabled in the House of Assembly last week, still allow the Ministry of Finance’s top official to withhold Tax Compliance Certificates (TCCs) if he/she believes any company applying for one has created a different corporate vehicle to evade payment of due taxes.

While the government remains empowered to demand that all companies with “similar ownership” or shareholding structures to the applicant entity pay their due taxes before a TCC is issued, the latest reforms - if passed - mean this requirement will not be a rigid provision that is set in stone.

The Financial Administration and Audit (Amendment) Bill’s section three states: “Where an applicant for a tax compliance certificate is a company, the financial secretary may require any other company with similar shareholding or similar ownership to satisfy its tax obligations.. before issuing a Tax Compliance Certificate to the applicant company where the financial secretary has reasonable cause to believe that the company with similar shareholding or similar ownership was established to evade the payment of taxes due by the applicant company.”


Marlon Johnson

Marlon Johnson, the acting financial secretary, told Tribune Business that the Ministry of Finance had “seen some attempts” by companies to evade their due taxes by incorporating under a different name or vehicle, then carrying on exactly the same business activities as the original entity.

He added, though, that the Financial Administration and Audit (Amendment) Bill is designed to provide flexibility by allowing himself and future financial secretaries to exercise their “discretion” in deciding whether to impose the ‘pay all taxes’ requirement on entities with “similar ownership”.

“What had happened is the law as previously written allowed the financial secretary or comptroller to not issue a Tax Compliance Certificate or licence if there was a shareholder in the company who was non-compliant [in their other business interests]. This is to clarify it,” Mr Johnson explained.

“It’s only in cases where we believe fraud is happening, where a company owes the Government money and they can’t get a Tax Compliance Certificate, so they create a corporate vehicle to do the same thing.

“We have seen some attempts at that where people owed government substantial tax revenues, and they created another vehicle to sell exactly the same goods and services. We’ve seen instances of that attempted.”

The Bill’s “objects and reasons” make clear that the Government’s intent is to “change the provision” in existing law “from a requirement that all taxes be paid on companies with existing shareholding where a company applies for a Tax Compliance Certificate to a discretionary power of the financial secretary to require evidence of tax compliance of other companies and businesses with similar shareholding or ownership before he issues a Tax Compliance Certificate”.

This, it adds, it to apply “only where there is reason to believe that the company or business with similar ownership was established to evade the payment of taxes by the applicant company”.

“It protects you if you are legitimately opening another company,” Mr Johnson said of the changes. “That’s something to assist the taxpayer, so the taxpayer is not challenged in that way. It’s only if you’re suspected fraud, tax evasion or some other offence.

“If someone is denied something they have a legitimate expectation of receiving, such as a Tax Compliance Certificate, taxpayers do have recourse if a decision is made by a public official, myself, or the Department of Inland Revenue. They can seek to avail themselves of the expanded Tax Commission and the courts if they feel aggrieved.”

While some in the private sector may welcome the removal of the law’s inflexibility, others are likely

The Government has also tabled legislation to consolidate The Bahamas’ various tax appeal bodies into one Tax Appeal Commission, with Mr Johnson admitting that the existing structure has “not functioned as intended in the law”.

He added that the Tax Appeal Commission Bill was also designed to strengthen the “integrity” of the appeals process through its section seven, which prevents both businesses and individuals from seeking redress from their grievances from ministers, politicians and public officials. Instead, they have to follow the process as set out in law.

“The truth of the matter is that our tax system over the years has become a little more sophisticated, especially with the move to VAT, and VAT comes with a number of things persons want to appeal,” Mr Johnson said.

“We have the Real Property Tax Board, the Business Licence Board and the Customs Board, so it makes sense to consolidate them into one Board so we build up expertise and precedent in tax matters.

“That’s what we’re attempting to do. It has taken some time to get even the VAT Commission constituted. Some of the other appeals Boards over the years have not functioned as intended in the law, and the Government recognises it’s important that taxpayers have appeals channels - appeals channels that are clear.”

Mr Johnson said this “clear path” was provided by the Act’s section seven, which states: “Where a decision-maker makes a decision which is appealable under this Act, no public official shall intervene in any matter relating to the decision, and any person who is aggrieved by such decision must utilise the procedures under this Act to dispute the decision.”

“The Government feels this will ensure there’s a clear line of responsibility component to preserve the integrity of the whole process,” he added.


Well_mudda_take_sic 1 year, 2 months ago

Just who does this prick Johnson think he is? LMAO


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