By NEIL HARTNELL
Tribune Business Editor
The Government’s enhanced Business Licence verification regime “screams that you don’t trust us” to pay all due fees, the Bahamas Motor Dealers Association’s (BMDA) president argued yesterday.
Ben Albury, also Bahamas Bus and Truck’s general manager, told Tribune Business this was the message being sent to tax-compliant businesses that have never failed to pay what is owing through the requirement all firms with annual turnovers of $5m and above submit full audited financial statements to validate their Business Licence filings.
Revealing that the BMDA and auto industry have written a formal letter to the Government, requesting a meeting over reforms due to be implemented from the start of 2024, he added that auto dealers viewed the move as “cost prohibitive” given their status as high turnover, low margin businesses due to the existence of price controls.
Mr Albury told this newspaper there are already sufficient “safeguards” in place to guard against tax evasion and turnover under-reporting, including in the new Business Licence Act, where fines of up to $150,000 can be levied for the submission of false declarations. As a result, he signalled that the full audit requirement was unnecessary.
The Government is close to agreeing “built-in flexibility” over the deadline for submitting the audited financials in a bid to ease the strain on companies, with end-June set to be selected as the cut-off point. And Simon Wilson, the Ministry of Finance’s financial secretary, yesterday further clarified that the audit “does not have to be aligned to the Government’s tax year”, which closes at June 30.
While the Business Licence is based on the calendar year, he added that in “instances where it is different there is a reconciliation process agreed” with the Bahamas Institute of Chartered Accountants (BICA) and its members. However, Mr Albury said he and his members are still seeking an audience with the Government in a bid to address their concerns.
“It’s cost prohibitive,” he told Tribune Business, pointing to the expense associated with undergoing a full audit. “It’s far-reaching in our opinion, and I guess in a lot of the opinions being expressed elsewhere. We have sent a letter to the Government requesting we have some consultation to discuss it.
“It’s going to put a big expense on us, especially at this time when we’re trying to regain our footing after COVID and supply shortages. We’re also dealing with price controls. We cannot pass the increase associated with these additional accounting fees on to the consumer, which means we have to absorb them along with a lot of other cost increases when it comes to doing business.”
Pointing out that price controls force Bahamian auto dealers to “work on very slim profit margins”, Mr Albury said just two BMDA members’ have financial year-ends on December 31. All other dealers are “spread out throughout the year”, which he added would result in additional Business Licence-related audit costs, although Mr Wilson yesterday stressed this issue has been addressed with BICA.
The BMDA president, though, argued that the Department of Inland Revenue’s ability to conduct audit inspections of companies suspected of evading or under-reporting taxes, as well as the more robust sanctions regime contained in the Business Licence Act, should provide sufficient deterrent to potential wrongdoers and make a full audit - especially when the fee is based solely on turnover - unnecessary.
“The bottom line is they trust us to collect VAT,” Mr Albury added of the Government. “We’re compliant with the Department of Inland Revenue and the National Insurance Board (NIB), every aspect of what they deal with, and if they feel there are people doing things illegally they should go after those individuals.
“They probably have a good idea of who is and who isn’t, and need to go after those companies rather than use a blanket approach... I think what this screams is that we don’t trust you. That’s what we and other businesses are being told.
“I think there are already safeguards and provisions in place to control that behaviour and, to the best of my knowledge no member of our Association has been accused of having fallen at any point or found to have done anything illegal.”
Mr Albury said auto dealers are “already mandated” by their manufacturers and creditors to undergo a financial review by a licensed BICA accountant annually, adding that this should suffice for the Government’s Business Licence purposes. “It’s not like we’ve just dotted these documents on a piece of paper and have handed them over,” he added.
Mr Wilson earlier this week said he is hopeful that the Government, accounting industry and private sector will shortly finalise and publish an agreed framework that has “built-in flexibility” over the deadlines by when companies with annual turnover exceeding $5m must submit their audited financial statements.
The proposed agreement focuses on end-April 2024 as the deadline for $5m-plus businesses to provide audited financials. Those unable to meet that timeline, and who have valid and good reasons for not doing so, will get an extension to end-June 2024 once they apply. Those going beyond June, he added, could be deemed non-compliant and subject to financial penalties.
Mr Albury yesterday said he was encouraged by the Government’s willingness to talk to the private sector, and added: “I just hope at some point we can get the floor to express our concerns and, hopefully at some point, get some resolution.
“In speaking to our members, there’s a great deal of concern, and speaking to other people in other industries they’re echoing the same sentiments. I’ve even spoken to accountants who are expressing concern as to whether this will even be feasible.
“The minute things start to get a bit better or start to turn, this comes up. I hope some thought is given to it, and there is some understanding of the effects it will have on us, and hopefully adjustments will be made. Hopefully they’ll respond soon and we can have a discussion. I appreciate the fact this government is interested in what people have to say, so hopefully this counts for something.”