Gowon Bowe, chairman of the Clearing Banks Association, voiced reservations about the proposed corporate minimum tax, suggesting it could lead to an inequitable two-tier banking system.
Speaking to Tribune Business, Mr Bowe Bowe said the tax, which targets large multinational enterprises, will apply only to foreign-owned commercial banks.
“There are some very peculiar influences that will have to be addressed. In my industry, you will have the likes of the Canadian and US-owned enterprises like RBC, Scotia Bank, CIBC, City Bank, that will be covered; but then you’ll have the Bahamian entities, Fidelity, Bank of Bahamas, Commonwealth Bank that will not be covered,” Mr Bowe said.
He questioned the viability of such a system, asserting, “Can you have a basically a two-tier system, one for domestic commercial banks and one for internationally owned commercial banks? I think the answer to that is no.”
The draft bill for the Pillar 2 corporate tax, released by the Davis administration on Monday, proposes a 15 percent tax on profits for large multinational enterprises (MNEs) with at least €750m in annual turnover.
This measure aligns with The Bahamas’ commitment as one of 140 countries that have agreed to the G-20/Organisation for Economic Co-Operation and Development (OECD) framework.
The consultation period for the bill will end on September 16, with Parliament expected to review it on October 9.
Mr Bowe also expressed concern over the short consultation period, noting that the corporate minimum tax represents a significant shift in tax policy.
“There are some concerns from the perspective that it is a relatively short consultation period with comments to be back by the middle of September, which, given this is probably the most significant tax legislative reform since VAT, it should be done in a very deliberate and comprehensive manner,” Mr Bowe said.
He stressed the need for a thorough and inclusive approach, saying: “We need to make sure that we are holistic, comprehensive and collective in our efforts.”
He further suggested that the corporate minimum tax presented an opportunity to reform the country’s outdated business licence regime.
“The truth of the matter is, the business license regime has been deemed antiquated and basically not fit for purpose for many years,” Mr Bowe said.
He advocated for a more comprehensive overhaul of the tax system rather than incremental changes. “Ultimately, we’re seeming to pick around the edges and only comply with the minimum requirements globally, when the reality is The Bahamas could benefit from being more comprehensive and changing its overall taxation system,” he added.
Mr Bowe also raised concerns about the readiness of the Department of Inland Revenue to handle the new tax.
“The devil in the detail is going to be some implementation issues that are going to have to be identified,” he said.
“There’s going to have to be some practical considerations in terms of the readiness of the government’s Department of Inland Revenue, the systems that are going to be necessary for the reporting and uploads in order to be able to implement it and make sure that it is effective.”
Additionally, he called for greater accountability from the government, suggesting the involvement of independent bodies such as the Fiscal Responsibility Council and the Auditor General.
“Reality is we now need to start being more accountable to the people, not by the cliché of transparency and accountability, but by the actions,” Mr Bowe said.
He urged for regular reporting and oversight, stating, “There should be an independent body like the Fiscal Responsibility Council, there should be the Auditor General, who should not be chastised and criticized every time that he has a negative report, but actually welcomed to say that these are the deficiencies that need to be addressed.”
Comments
ExposedU2C 1 month ago
It is painfully obvious that this clown Bowe is a big time proponent of all the following:
1) More taxes on the already struggling Bahamian people and their businesses;
2) Bigger government as a means of reducing unemployment and growing a social welfare state;
3) Higher inflation that naturally results from more taxes on businesses and more social welfare spending by a bigger government; and
4) Doing whatever foreign globalists demand without regard to our nation's own sovereign interests and the well-being of the Bahamian people.
In short, Bowe has revealed himself here to be a far left leaning socialist of the globalist variety (bordering on Marxist), as opposed to a sensible progressive in the conventional sense. Has he become a card carrying member of the CCP?
Most of us remember only too well how Bowe vociferously supported the introduction of VAT and the later increase in the rate of VAT, all under the guise of an urgent need to actually start paying down the balance of our national debt. He later conveniently joined the chorus of our spendthrift incompetent and wasteful politicians when they began singing, "No, no, we never meant for VAT to actually pay down the balance of the national debt, what we really meant was that VAT was needed to help slow down the pace of growth of the national debt." Talk about selling the Bahamian people a worthless promise!
ExposedU2C 1 month ago
Someone needs to remind Bowe that government policies are needed that grow the private sector by easing the ability of existing businesses to do business, promoting the start-up of new businesses, and increasing the percentage of the Bahamian economy owned by Bahamians.
Government policies should be focused on creating new private sector jobs, preventing an undesirable concentration of wealth among only a few Bahamians, and stopping the selling of our nation's scarce resources, especially land, to the highest foreign bidder.
Decades of bad government policies fostered by corrupt politicians at the highest levels, have made our domestic economy much too fragile and weak to withstand any kind of additional significant tax burden. The introduction of income tax at this time would only serve to grow the size of our already grossly over-bloated, unproductive and very costly government (public sector).
Common sense dictates that many other things must be put in order before meaningful tax reform can be properly entertained. To do otherwise only invites additional tax dollars being used to feed the growth of government while exacerbating the shrinkage in our nation's private sector tax base. That's just 101 economics!
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