AS THE World Bank has dropped The Bahamas a spot in its ease of doing business rankings, Deputy Prime Minister K Peter Turnquest has called its assessment a "misunderstanding".
The Bahamas has dropped one notch in the ease of doing business rankings - from 118 to 119 out of 190 countries.
The annual ranking is a benchmark examining starting a business, getting electricity, registering property, protecting minority investors and paying taxes.
The Bahamas is said to have made progress in four of these areas, with "registering property" being the only one where the country has failed.
The report said: "The Bahamas made property registration more costly by increasing the stamp duty on property transfers."
The report also pointed to The Bahamas having high compliance and the costs associated with preparing documents.
Last year, Prime Minister Dr Hubert Minnis said he was going to make ease of doing business a top priority for the government and that the Ministry of Finance was spearheading an inter-agency working group to make business faster, cheaper and better.
"Ease of doing business is a serious issue that has support and attention at the highest levels of government. At the Ministry of Finance, we spearhead the inter-agency working group that is focused on driving change across government based on the focus areas assessed by the World Banks' Global Ease of Doing Business Ranking," said Mr Turnquest, when last year's rankings were published.
The Bahamas had shown marginal improvement each year, having ranked 121 in 2016, 119 in 2017, 118 in 2018, but now ranking 119 again in 2019.
Last year, the government announced that they formed a "working group" aimed at aggressively increasing the ease of doing business rankings. The group included representatives from the Ministry of Finance, the Office of the Prime Minister, the Office of the Attorney General, the Department of Inland Revenue, the Customs Department, the Department of Public Works, the Central Bank of The Bahamas, the Registrar General's Office and the Securities Commission.
Mr Turnquest said about this year's drop: "We had a full year of intensive improvements in legislation to address the main points with us being marked down in the rankings in previous years."
The government passed the Companies Amendment Act 2019 in April, designed "to support the growth of equity markets by providing for the enhanced protection of minority investors primarily as it relates to conflicts of interest, related party transactions, shareholder governance and matters connected thereto. It seeks to bring these aspects of the Companies Act in line with international best practice".
Mr Turnquest pointed to the need to speed up building permits and also the speed at which electricity is connected along with the reporting of outages and said his government is "working on those". He also added: "We have been trying to streamline the process."
On the category where The Bahamas was reported to have not progressed, Mr Turnquest said: "That is a misunderstanding on the bank's part. The cost of registering land has not gone up, but what the government did was changed it from the dual taxation regime of 7.5 percent in value added tax (VAT) along with the stamp tax at 2.5 percent, because what we found was that some companies were abusing the system and only paying the stamp tax 2.5 percent and not the VAT. So we sought to close that loophole to move back to just paying the stamp tax at 10 percent.
"Theoretically the company may be able to claim that their stamp tax went up to 10% but what we did was close the loophole that allowed them to get around paying the VAT by claiming it as an input.
"But then we had to move the entire regime back to VAT again to address some Organisation of Economic Cooperation and Development (OECD) matters so we can do away with perceived ring fencing issue. They thought that the way the original legislation was worded when we switched back to paying simply the stamp tax was that they felt that Bahamians were paying a different stamp tax than foreigners.
"The caveat is that they cannot claim it as an input now. These amendments were done in the last budget."
Mr Turnquest also cited the high document compliance fees and said: "Unfortunately for us we are subject to a slew of compliance costs that are not really relevant to us via cross-border initiatives we have signed on to and are obligated to, but we are obligated to monitor and keep in compliance. This is not something that is new or something only with regard to us but it may be more pronounced to us because we are a small jurisdiction. We are now looking at everyday issues that affect everyday Bahamian businesses."
Democratic National Alliance leader Arinthia Komolafe criticised the efforts to improve the national ranking, saying: "The fact that we have dropped another notch shows that we are not doing sufficient to improve our ranking in the international community's eyes."
She also lamented the inability to get services completed in a timely fashion from government agencies, saying "being able to get services from agencies is still a challenge" and that "reliable electricity is a major issue. This is no surprise that our rankings are falling."
Mrs Komolafe said digitisation of government services is "not where it needs to be".
She added: "With regard to getting drivers licences, Bahamians should be able to do that simply. There should be a barcode on your licence plate that should allow the person scanning it to look at all of your details, rather than having to drive around with your insurance documents in car and produce them on site.
"Once you register with the Road Traffic Department your information should be put into a system and when your licence is scanned like a barcode all of your registration details should appear."
Mrs Komolafe called for energy reform and said high energy costs are a considerable hindrance to doing business in The Bahamas, and that "the time that it takes to get a construction permit is still an issue and people are now openly complaining".
Mrs Komolafe did welcome progress in the Department of Customs with the newly launched electronic single window and said: "The Bahamas click to clear is a good sign of progress. But ultimately, we are just slow to make changes in the relevant areas. We have been making headway but we need to speed up the pace in these reforms."