The Tribune

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

PRIME Minister Phillip “Brave” Davis highlighted incentives for The Bahamas to introduce a corporate income tax yesterday, noting that multinational companies could face a “top-up tax” in their base country if The Bahamas does not conform with the global minimum tax push.

His comments came after a green paper on corporate income tax was released on the government’s website last week –– nearly two years after the country signed on to a G-20/Organisation for Economic Co-Operation and Development (OECD) drive for a minimum 15 per cent global corporate tax.

Mr Davis said consultation surrounding the tax proposals has been extended and would end in August. He said the government would not introduce new or increased taxes without feedback from stakeholders.

“A green paper presents options on what a corporate income tax policy for The Bahamas might look like, but it doesn’t contain a commitment to any particular policy action,” Mr Davis said. “This is to be arrived at after the period of consultation.”

Mr Davis said forces beyond the control of The Bahamas are incentivising the push for a corporate income tax.

“As well documented in the green paper, there are two factors that drive this initiative on corporate income tax –– one of which is the government’s need to address the G7 initiative to tax the profits of multinationals with annual revenues in excess of euro 750 million earned in every jurisdiction in which they do business,” he said.

“The Bahamas became a signatory to the OECD’s pillar two framework on July 1st, 2021 and together with some 350 countries agreed to the implementation of a 15 per cent minimum corporate income tax for the in-scope identities.”

“The Bahamas is not obligated to impose 15 per cent corporate income tax. However, these entities in The Bahamas meeting the threshold of 750 million euros annually will be liable to pay a top-up tax in their various jurisdictions where their head offices are where they are not paying this income tax, so this is an incentive for The Bahamas to impose the 15 per cent minimum corporate income tax.”

“What I mean by that is if we don’t impose it on the multinationals, wherever they are headquartered, that jurisdiction will top-up whatever their taxes are to make up for the 15 per cent that we would not get.”

Mr Davis said the government is also exploring corporate income tax options to make the tax regime more fair and equitable.

“Of significance here,” he said, “is the prevailing concern about the inherent bias in the business license fees where firms still incur a significant tax burden even in loss-making years because calculations are based on turnover instead of profits.”

“I want to emphasise here that if it is decided that a corporate income tax is to be levied on companies doing business in The Bahamas, those companies paying a corporate income tax will not also pay business licence fees.”

Mr Davis vowed that his administration would be transparent about its plans.

“Stakeholder feedback is key to the government crafting the optimal design for the corporate income tax strategy,” he said. “And I wish to announce today that we extended the period of consultation until August 31, 2023.”