The Tribune

By YOURI KEMP

Tribune Business Reporter 

ykemp@tribunemedia.net

The Attorney General yesterday said the Government will retain the Commercial Enterprises Act’s “useful aspects” when it moves to “repeal and replace” the existing law’s work permit-related provisions in the next parliamentary session. 

Ryan Pinder KC, speaking ahead of the weekly cabinet meeting, disclosed that the Davis administration plans to retain sections in the existing Act that provide for the creation of commercial enterprise zones since this can be a tool that aids Bahamian economic development. This country already possesses something similar in Freeport’s Hawksbill Creek Agreement, but he referred to Dubai and Cayman Islands when giving examples of such zones.

However, Mr Pinder said the more flexible work permit regime contained in the original Act, which was passed by Parliament when the Minnis administration was in office, will be repealed in line with the Government’s election campaign promises to better protect employment and job opportunities for Bahamians.

“We did a full review of that piece of legislation coming into the election,” the Attorney General added. “In our blueprint for change, you would have noted, we had some objection to that legislation. Our objection was focused around the automatic grant of work permits and ensuring that Bahamian employment is protected.

“However, on a full review of the legislation, we thought there were aspects of it that would be useful for economic development. So it provides for commercial enterprise zones, which would be given some commercial preference in different types of industries. We see that happening in Dubai and Cayman Islands, and in other countries, and so we thought that was a valued piece of the legislation that really needed to be expanded upon and reformed.” 

The Commercial Enterprises Act was seen as an attempt by the Minnis administration’s to liberalise and deregulate key elements of the Bahamian economy to drive greater GDP growth and job creation, while sending a message to investors - Bahamian and foreign - that the country was open for business.

It was designed to remove the bureaucracy and “red tape” investors encounter when attempting to obtain work permits from the Immigration Department for key management and skilled workers, signalling the Government’s commitment to improving the “ease of doing business”.

The Act sought to introduce certainty and predictability to the work permit regime by requiring the director of immigration to make a decision on their approval within 14 days of the application’s receipt. Applications from businesses covered by the Act have to presently be submitted within 30 days of the worker’s arrival in The Bahamas.

The legislation, though, does not apply to all - only businesses listed in its schedule, and these have to be approved by the Government before they can access the incentives. The Commercial Enterprises Act is largely focused on industries not present in The Bahamas, but which have the potential to create high-earning jobs and be major foreign currency earners.

Financial services leads the way with reinsurance; captive insurance; investment fund administration; arbitration; wealth management; international trade and international arbitrage included in the ‘fast track’ work permit sectors. Also covered by the Commercial Enterprises Act are technology-related industries such as computer programming; software design and writing; bioninformatics and analytics; nano technology; and biomedical health facilities.

“Boutique health facilities”; data storage and warehousing; aviation registration and ‘approved’ aviation maintenance operations; ‘call centres’; and manufacturing and assembly/logistics businesses round out the sectors targeted by the former administration, which said there was nothing in the legislation that prevents the Immigration Department from revoking a permit issued under the Act if adverse information is subsequently discovered.

The Act’s introduction was also hailed by many in the private sector. Judith Whitehead, Graham, Thompson & Company’s managing partner, expressed hope during the 2019 Bahamas Business Outlook conference that the 14-day work permit approval deadline imposed on the Department of Immigration by law would result in an improved turnaround time for all other applications.

She backed the Act’s introduction as “setting the stage for the future” by moving the Bahamas’ investment incentives regime away from its emphasis on “bricks and mortar” projects, and suggested many of the criticisms surrounding its introduction were misplaced, since the businesses/industries targeted were “a virtual mirror” image of those identified for foreign direct investment (FDI) long ago by the Bahamas Investment Authority (BIA).

Meanwhile, Mr Pinder yesterday said The Bahamas was making rapid progress in tackling the three areas of weakness - adequate legal regime, its enforcement and the economic substance reporting portal - that resulted in the country’s blacklisting last year by the European Union (EU) for being non-cooperative for tax purposes.

“There were really three aspects on why we were on the non-cooperative list. The first one would be the legislation, and updating the legislation to make sure we were complying with international best practices,” he added.

“The second component was the reporting portal was ineffective. That was the one that was put in place at Inland Revenue, and the third component was we needed to show that we were actually enforcing the laws; doing on-site inspections, seeing if everybody was complying who should be complying.” 

The Government has hired BDO, which also developed the BOSS (Beneficial Ownership Secure Search System) for The Bahamas to create a purpose-built economic substance reporting portal, which has “already been demoed (demonstrated) by industry.” 

A training session will be held this week with the financial services industry on use of the reporting portal, which will help to provide the Government with the necessary feedback. Mr Pinder added: “We’re looking at a full launch of that portal [for the] first week in September, just in time to the for the end of the reporting period, which ends September 30.

“On the enforcement side, the Ministry of Finance is the competent authority and have been doing on-site inspections. They’ve done in excess of 30 on-site inspections. 

“To evaluate compliance with reporting, they found a few that were non-compliant. They’ve actually issued fines and asked for remediation on those aspects, so those on-site inspections are underway and they have about 35 more slated to start in September. So we’re meeting all the expectations that were laid out for us and the EU usually comes for a reassessment in October.” 

Prime Minister Philip Davis KC and Michael Halkitis, minister of economic affairs, last month and met with the EU technical group that handles tax matters to update them on The Bahamas’ efforts to meet their demands and become compliant.