Supervisory fees to replace business license fees paid by banks
Banks will no longer be subject to business license fees, but will be subject to supervisory fees, Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday, explaining that this move eliminates preferential treatment for international financial entities and does away with the idea of ring fencing.
He added that this new approach will also remove the need for the government to offer direct subventions to entities like the Securities Commission of The Bahamas, the Compliance Commission, the Insurance Commission of The Bahamas and the Financial Intelligence Unit, as the model calls for those supervisory fees to be paid to the aforementioned regulatory bodies.
Turnquest added there could be a marginal increase in the amount raised by the fees.
Outgoing President of the Bahamas Institute of Chartered Accountants (BICA) Gowon Bowe told Guardian Business yesterday that financial sector representatives all agreed when they met early this year that this approach was best for the banking industry, both domestic and foreign.
Bowe added that this change also opens the door for all banks to decide which financial services products they want to offer.
Their “supervisory fees”, which Turnquest said will be paid to The Central Bank of The Bahamas, will be calculated based on the risk profile of their product offering.
“This will allow for the better matching of costs to levies without significantly changing the charges to the individual banks subject to the levies,” said Turnquest.
“Thus, with these changes, both domestic and offshore banks will be treated the same, with no preferential treatment given to the latter, while adhering to international best practices.
“Moving forward, all banks will be subject to supervisory fees and charges; those with Bahamian dollar liabilities of over $100 million will incur a ‘domestic systemically important institution’ (DSII) levy of 0.3 percent per annum on the leviable amount, which will be payable to The Central Bank of The Bahamas,” said Turnquest.
“What is changing is the administrative process in the collection of these fees, in that the central bank will collect and then deduct its cost of regulation as well as those on behalf of the Securities Commission, the Compliance Commission, the Insurance Commission, and the Financial Intelligence Unit and remit the excess to the government.
“This will obviate the need for the government to provide direct subventions to these entities. It is important for me to repeat so as to be absolutely clear: this regime will not in any way mean a reduction in the government revenue derived from the financial sector of the Bahamian economy.”
Turnquest said the changes to the sector should enable The Bahamas to remain a competitive financial services jurisdiction, “even while removing the preferential exemptions that were previously given to non-resident IBCs (international business companies)”.
Education: Florida International University, BS in Journalism