The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian companies with an annual gross turnover of less than $50,000 have been exempted from new laws requiring firms to keep accounting records for five years, as this nation comes into line with the Organisation for Economic Co-Operation and Development’s (OECD) demands.

Ryan Pinder, minister of financial services, yesterday confirmed to Tribune Business that amendments to the Companies Act exempted small businesses, such as ‘Mom and Pop’ stores, from these requirements due to fears that it would impose an onerous cost and administrative burden on them.

“The Companies Act was amended to ensure there’s a $50,000 gross threshold, so it doesn’t apply to companies under $50,000,” Mr Pinder told Tribune Business. “We didn’t want to impose prohibitive requirements on micro and small businesses.”

He added that it was the same threshold employed in the Business Licence Act, where companies with a turnover under $50,000 per year pay a flat $100 fee and do not have to maintain accounting records.

Mr Pinder reiterated, though, that it was “always good business practice” for Bahamas-based small and micro businesses to keep accounting records, given that these would be vital in accessing bank loans and other credit should they wish to expand.

“It’s [the amendments] very important in that traditionally the very culture of small business in the country is that you have a lot of cash-based businesses, which find it difficult to have back-up accounting records,” the Minister said.

“But it is always good business practice, and I always tell small businesses this, that you do produce accounts, you do produce records to support the business, as at some point in time you may want to make the transition from a micro business to a small or medium-sized business.”

Mr Pinder disclosed that the amendments - brought to the House of Assembly on Wednesday night and passed at the second reading - were being implemented just one week before the OECD returned to the Bahamas to conduct its second phase Peer Review of this nation.

The first so-called OECD Peer Review, which focused on whether the Bahamas had an adequate legislative and regulatory regime to meet its transparency and tax information exchange obligations, found only one weakness - the absence of any statutory requirements for corporate entities to maintain accounting records for a minimum five years.

The former Ingraham government brought a package of Bills to Parliament to address this, but withdrew several after concerns were expressed - including by Mr Pinder while he as an Opposition MP - that they imposed requirements that were too onerous for small businesses and entrepreneurs.

Now a Cabinet Minister, Mr Pinder brought the revised versions of the Companies Act, Partnership Act, Trustee Act and Business Licence Act amendments to the House of Assembly on Wednesday night.

“We are confident this is the legislation necessary to bring us into full compliance,” Mr Pinder told Tribune Business. “In conjunction with this, the regulators are actively working on proposed guidelines as to how this will be implemented.

“I’m surprised the FNM did not take the advice we gave, included certain exemption thresholds and proceeded. Instead, they mothballed them. The final legislation is what we believe to be a good compromise.”

The phase two OECD peer review, which is scheduled to start at the end of next week, will review whether the Bahamas has fully implemented its legislative and regulatory regime.

“I’m confident that we’ll fare well,” Mr Pinder said. “We fared well in phase one, except for those accounting records, but we’ve put that in place.

“We’ve always been a compliant country, and compliant from a government agency point of view, so we anticipate we’ll have positive results.”

However, K P Turnquest, the Opposition FNM MP for eastern Grand Bahama, told Tribune Business that he was concerned that the amendments to the four Bills appeared to impose a statutory requirement to maintain accounting records without the need for audited financial statements to be prepared.

He added that there appeared to be no oversight requirement, while sanctions and how long records had to be kept for were not consistent across the four Bills.

“We’re going half-way with it,” Mr Turnquest told Tribune Business. “You have accounting records but no financial statements. There’s no regulatory procedures for ensuring the law is complied with; it’s a self-regulatory thing.”

Noting that additional costs would be incurred, Mr Turnquest agreed with Mr Pinder that no business should be discouraged from keeping proper accounting records and financial statements.