Restructuring of govt’s business taxation system being explored
The government announced yesterday its intention to extend the business license fee rate of 0.75 percent to all hotels with ten rooms or more.
The rate is only currently applied to hotels with a turnover of $400 million.
During his presentation of the 2018/2019 budget in the House of Assembly yesterday, Deputy Prime Minister and Minister of Finance Peter Turnquest said the extension is “so that smaller Bahamian-owned hotels can take advantage of the concession that were offered to the larger, foreign-owned properties”.
The extension was a part of amendments to the Business License Amendment Bill, 2018 which seeks to amend the Business License Act, 2010 yesterday.
Another provision of the bill provides for educational institutions which receive a government subvention to be exempt from paying business license tax.
The bill also seeks to clarify the definitions of foreign person and contract officer, while also clarifying the requirements for renewal of a business license.
Turnquest also announced that financial services firm Deloitte has been commissioned to conduct an exploratory assessment of how to further restructure the government’s business taxation system.
Turnquest said the business license regime – widely considered inefficient with a fee structure based on turnover – has long been a cause for concern within the business community and with policymakers.
“Accordingly, we have commissioned Deloitte to undertake a detailed assessment of the appropriateness of, and options for, alternative forms of business tax in The Bahamas, the revenues from which could, as an option, serve to replace the fees now collected in respect of business license,” Turnquest said.
Earlier this month government passed the Multinational Entities Reporting Bill, 2018 which includes clauses that would pave the way for a corporate tax system in The Bahamas.
The Bahamas Financial Services Board has long championed the move to a corporate tax system to replace the current business license regime, however Attorney General Carl Bethel has said that government is not considering a corporate tax at this time.
Turnquest stressed on Wednesday that in light of evolving international pressures, it is appropriate to look at restructuring the tax system away from narrow-based and distortionary taxes.
“At this stage, this is simply exploratory work geared to obtain an empirically based assessment of tax options and to canvass the views of a full range of Bahamian stakeholders,” he said.
“This study is just underway and I emphasize that no policy commitment has been made to the introduction of any alternate form of tax at this juncture.
“As well, it needs to be borne in mind, at least for the purposes of prudent fiscal planning, that the introduction of such a new tax instrument would require an appropriate development and implementation period that would extend beyond the time horizon of this budget,” he noted
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