The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

THE government plans to introduce tax incentive legislation to reduce the cost of doing business, according to Deputy Prime Minister Chester Cooper.

While tabling the Domestic Minimum Top-Up Tax bill in Parliament yesterday, Mr Cooper said the bill will introduce an effective tax rate of 15 percent for in-scope multinational enterprises operating in The Bahamas that have annual consolidated revenue of or above 750 million Euros or approximately $818m.

This will be the first such income-based levy in the country’s history, and is intended to ensure The Bahamas complies and fulfils its obligations as one of 140 countries that have signed on to the G-20/Organisation for Economic Co-Operation and Development (OECD) drive for a minimum 15 percent global corporate tax.

Mr Cooper said the “lion share” of revenue from the tax will be used for debt reduction and reducing the cost of living in the country.

He said along with the tax implementation the government will also introduce incentives to reduce the cost of doing business and will impact small and large businesses.

“The consultation paper foreshadowed the government’s intention to introduce some form of incentives to reduce the cost of doing business in The Bahamas. These incentives will be laid out in a companion piece of legislation,” said Mr Cooper.

“These incentives would when introduce would impact all businesses not just businesses which qualify for the DMTT. In this respect, the government within this year and prior to any tax becoming payable under the DMTT would introduce a legislation that will lay out the framework for such incentives in a manner that will qualify under the GloBe Rules. This proposed Bill because of its impact on all businesses would require public consultation.”

He said during the consultation for the corporate income tax, participants highlighted the need for incentives that will attract new business development in areas such as tourism, finance and technology.

The tax incentive legislation is expected to be revealed during the mid-year budget.

“In the consultation process with the DMTT, several respondents suggested that any new incentive regime be aligned with attracting new business development in key economic activity, namely, headquarters, tourism, finance, technology and energy.

“And, in this regard, consideration could also be given to incentives associated with employment, capital expenditures, training, local content spend, research and development costs, the creative industry, and extraterritorial turnover. The government acknowledges the importance of developing this new regime, which would need to apply broadly across businesses in The Bahamas. Consequently, the view was taken that a separate Bill be crafted to reflect the final position of the government and submitted for consideration during the mid-year budget exercise.”

Dr Leo Rolle, CEO of the Bahamas Chamber of Commerce and Employer’s Confederation (BCCEC), said the private sector remains “cautious about incentivised promises that often fail to materialise”.

He said while the BCCEC is open to any initiate that will improve the ease of doing business, government should ensure its implementation is equitable.

“While we acknowledge the government’s intentions, we remain cautious about incentivised promises that often fail to materialise,” said Dr Rolle.

“We welcome any measures that reduce the cost of doing business and improve ease of operations. However, we are still waiting to see when and where the net zero effect will occur for businesses, ensuring that any tax implementation allows for equitable taxation, enabling the business community to operate and grow effectively.”

He said the application and approval process for the ta incentives should be “straightforward” so business owners are not frustrated with its implementation and welcomed the public consultation process so the private sector can participate in its drafting.

“We expect a fair and straightforward application and approval process that does not frustrate the business community, as seen with other government incentivized programs,” said Dr Rolle.

“We are pleased that public consultation is required and welcome the opportunity to collaborate with the government to craft fiscal measures and policies that reflect the challenges faced by businesses in the blue, green, and orange economies, who also stand to benefit from the concessionary considerations.”

Dr Rolle also recommended that a “robust” public awareness campaign is launched prior to the implementation of the corporate minimum tax so all businesses understand who it applies to.

“Additionally, we recommend a robust public awareness and education campaign to ensure businesses understand the qualifying parameters under the GloBe Rules and do not feel disenfranchised by the implementation,” said Dr Rolle.