The Tribune

A well-known Bahamian accountant yesterday said the indirect tax burden on local companies effectively meant they were paying 30-40 per cent of every $1 million they earned in tax.

John Bain, managing partner at UHY, Bain & Associates, said: “With no form of direct taxation except the Business License tax, the Bahamas’ [direct tax] rate appears unusually low when compared to other countries.

“The amounts payable for Business License fees do not, however, reflect the true taxes paid by the business community in indirect and direct taxes. With high import duties, the high cost of fuel and wage expenses, the true tax on $1 million dollars’ worth of revenues could be anywhere between 30-40 per cent, or $300,000 to $400,000.

“The high levels of indirect taxes should be addressed as a matter of urgency if the economy of the Bahamas is to experience significant growth in the near future. The Government has indicated that it is aware of the inhibitors to conducting business, and we are happy to report that our level of confidence has increased due to some recent pronouncements by the Government in addressing the high cost of doing business in the Bahamas.

“The Government has taken great pains to communicate to the business world, especially to international investors, that it is business-friendly and willing to take steps to welcome foreign direct investments into the Bahamas. Whether the recent pronouncements will result in a lower tax burden is left to be seen, but with no income taxes, the Government is challenged to finance itself. It is doubtful that the Government is in the position to, in the near future, reduce the total tax burden for businesses.”

Mr Bain was commenting after a global survey by UHY found that some developed nations were still dragging their economies down with far higher corporation tax rates than emerging economies.

On taxable profits of $1 million, the G-7 group of developed economies takes an average of 32.6 per cent of corporate profits in tax, compared to an average of 30.3 per cent in the BRIC (Brazil, Russia, India, China) economies.