The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian private sector yesterday slammed business licence-related demands for their bank account details as "overkill", and asked: "When's it going to be easier to do business?"

Michael Maura, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, told Tribune Business that the new business licence regulations had left many businesses "scratching their heads and wondering what's next" in terms of the "red tape" they must overcome.

His concerns were expressed amid growing unease over the increased demands for financial information in the amended business licence regulations, which were brought into effect on May 30 this year but are only now attracting heightened scrutiny as the 2019 payment deadline approaches.

The Government, in a bid to ensure it collects every due cent in business licence fee revenue, wants companies with an annual turnover of $10m or more to provide audited financial statements that will confirm their prior year earnings.

For those businesses earning between zero to $10m, the regulations stipulate that "a financial statement" confirming their turnover must be supplied to the Department of Inland Revenue (DIR).

This, though, must also be accompanied by "a certified bank statement" covering each bank account held in the business's name and any other accounts "that are used in transactions" on its behalf.

Mr Maura said that while legitimate businesses appreciated the Government's efforts to crack down on tax dodgers and cheats, the enhanced business licence reporting requirements threatened to further over-burden the private sector and Department of Inland Revenue with unnecessary bureaucracy.

"For those that work very hard to be compliant and operate under the legal framework, we expect the Government to ensure as best as possible that the business community is adhering to the law," he told Tribune Business.

"The challenge we have, hearing from our business community, is that this is just another level of red tape to doing business in The Bahamas. And, notwithstanding the admirable objectives of the Government, the Department of Inland Revenue has its own challenges in trying to keep up with the amount of red tape."

Mr Maura said the Government's main revenue collection agency was in danger of being over-burdened by extra responsibilities, given that the Business Licence regulations require it to inspect more documentation at exactly the same time as the National Health Insurance (NHI) Authority wants it to help "police" business compliance with contributions to the new healthcare scheme.

He added that this was likely to impair the Department of Inland Revenue's efforts to treat the private sector as "partners", and implement efficient tax payment and filing systems that facilitated Bahamian businesses.

"I believe the Department of Inland Revenue wants to do exactly that," the Chamber chief said. "I don't believe they show up to work every day to challenge business.

"Yet we have all these layers of red tape to ensure the private sector is paying, and paying what it's supposed to be paying, but I wish the Government would have made an undertaking to ensure compliance with its own rules and objectives.

"It's extremely frustrating to businesses. I think the business community, in many cases, are scratching their heads, wondering what's next and when will it end. When will it actually be easier to do business?"

Pointing out that VAT filings had given the Government "a better view" into the level of commerce being conducted in The Bahamas, Mr Maura added: "Sometimes I feel like people are sitting around a table wondering what they can do now when they haven't produced and effected an efficient process that actually encourages business."

Others went further in their criticism of the bank account information demands. Rick Lowe, an executive with the Nassau Institute think-tank, told Tribune Business: "That's [bank account details] none of their business. What is this? A police state?

"Come on. They just keep making it more and more difficult by piling on more regulations. If the odd person has committed an offence then punish them, but don't make everyone suffer for what they might perceive is happening. There's enough regulation already."

Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) president, told this newspaper that much of the information sought by the new Business Licence regulations "seems like overkill" given that the fee is based on just one item - a company's annual turnover or top-line revenue.

He added that the use of different terms in the regulations, such as "audited financial statements" and "financial statement", had created confusion given that some were not recognised or defined by International Financial Reporting Standards (IFRS).

BICA is in the midst of preparing a "position paper" on the regulations, with Mr Bowe revealing that the Department of Inland Revenue had admitted it should have consulted the accounting body first before moving ahead.

"The first thing is that when you look at tax systems around the world, audit is the highest level of attestation, and usually only begins when you believe there is an erroneous or fraudulent filing and you are investigating the business," the BICA chief explained.

Yet the Business Licence regulations call for such a procedure to be applied to businesses with a $10m annual turnover or greater at the front-end, rather than after filing and payment has occurred, which Mr Bowe described as the global norm.

He added that "financial results" are not defined by IFRS standards, and said: "That's the uncertainty or lack of clarity. Is that financial statements? Financial statements means balance sheets, income statements and cash flow statements.

"That's a full set. Are you really meaning that? That's not required to support the information for a simple tax charged on a revenue basis. If there's a desire to have assurance, is that threshold not too high? And do you have a right to that type of information [bank accounts] from a company when the tax is actually based on revenue? Is it getting information beyond what is necessary? That is a very confidential set of documents."

Mr Bowe said small and medium-sized enterprises (SMEs) often used their owners' bank accounts to conduct business, while loans, dividend payments and capital investments often went through the accounts of larger companies.

Such information is not required for Business Licence calculation and reporting, but the BICA president warned that under the regulations "that type of proprietary information will be made public by being filed with the Government" even though The Bahamas has no corporate or income taxes.

"The main thing is not to put businesses in a panic," Mr Bowe told Tribune Business, with BICA and the Department of Inland Revenue now locked in "critical one-to-one discussions" to resolve the issue. The Prime Minister has also publicly acknowledged the concerns generated by the regulations.