The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Prime Minister yesterday extended the corporate income tax consultation period by almost two months to end-August 2023 as he reassured that the Government has not decided upon "any particular policy action".

Philip Davis KC, addressing the House of Assembly on the Government's 'green paper', said The Bahamas has "an incentive" to comply with the G-20 and Organisation for Economic Co-Operation and Development's (OECD) minimum 15 percent global corporate tax as it would receive all revenues generated from applying this levy to local entities who are part of multinational groups earning 750m euros or more in annual turnover.

Failure to impose a 15 percent corporate income tax rate, he added, would merely result in The Bahamas losing tax revenue it could have gained as those multinational entities would then be subject to a "top-up" tax in their home country jurisdictions. Thus revenues which could have been paid in, and earned by, The Bahamas would instead go to these home country jurisdictions.

"Those entities in The Bahamas meeting the threshold of 750m euros annually will be liable to pay a top-up tax to their head offices in jurisdictions where they are not paying this corporate income tax. Therefore, there is an incentive for The Bahamas to impose the 15 percent minimum corporate income tax.

"The second motivation for exploring a corporate income tax is to address the Government’s goal of securing greater fairness and equity within The Bahamas’ existing tax regime. Of significance here is the prevailing concern about the inherent bias in 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 would not also pay Business Licence fees."

Turning to the corporate income tax consultation paper, which was drafted after studies by the Deloitte & Touche accounting firm, Mr Davis said: “It was also ably supported by a Business Advisory Committee comprised of economic sector representatives, and employed an assessment process that included interviews with key business leaders on potential options, risks and challenges.”

"While the green paper presents options on what a corporate income tax policy for The Bahamas might look like, it does not contain a commitment to any particular policy action. The 'white paper', which is to follow the 'green paper', will contain explicit policy statements on the Government’s intended approach to the corporate income tax strategy and its implementation, and will set out proposals for legislative changes and the introduction of new laws,as deemed necessary.

“As we move forward, rest assured that fairness and equity are non-negotiable. Any changes to our tax regime must - and will - benefit The Bahamas and our people."