The government is budgeting some $60 million in revenue foregone over the next three months to facilitate a Tax Credit and Tax Deferral Employment Retention Programme that would provide medium to large scale businesses with payroll support, in an effort to retain up to 10,000 private sector jobs over the next three months.
Deputy Prime Minister and Minister of Finance Peter Turnquest said today that around 200 companies would benefit from this initiative.
“Protecting job security for Bahamian workers in the private sector is a key priority for the government,” he said.
“Under this program, qualifying businesses can receive assistance under a tax credit and tax deferral to help cover payroll expenses,” he said in the House of Assembly.
“The program allows businesses to defer the payment of certain taxes and to benefit from a tax credit, up to $300,000 in each instance. This accommodation is specifically to provide businesses with the cash flow to preserve current employment levels. Businesses will have to commit to utilization of the tax credit solely for the purpose of covering payroll requirements.”
Of the $60 million in forgone revenue, Turnquest said $30 million will be effectively provided by the government to pay the full salaries of Bahamians over the three month period.
In order to qualify businesses must be in good standing with government tax collection agencies, the deputy prime minister noted.
“A qualifying business will make an application to the Ministry of Finance and will be able to withhold their outstanding business license or VAT receipts collected – up to $200,000 per month for up to three months. If they qualify at the maximum funding level, then one half of that monthly sum – or $100,000 – will be in the form of a non-reimbursable tax credit. The other $100,000 will be deferred until January 2021 when it will be paid back in equal monthly installments over 12 months,” Turnquest said.
“To qualify, a business must have a minimum of 25 employees. The qualifying amount for a participating business cannot exceed its non-executive payroll for the relevant period. Companies must commit to retaining 80 percent of their staff count as at February 2020. The net effect of this initiative is that for some businesses, the government will be paying the salaries of half of their employees for the next three months and providing them with the cash flow to pay the remainder.”
Businesses that have been excluded from this initiative include retail or wholesale grocery, hotel and resorts, regulated financial and insurance entities, regulated telecommunications businesses and gaming businesses.
The government is also allocating an additional $5 million to finance a similar initiative for micro, small and medium enterprises (MSMEs) that have already qualified for a business continuity loan to assist with payroll through grants between $2,000 and $20,000.
Further details of the Tax Credit and Tax Deferral Employment Retention Programme are expected to be published by the end of this week, and applications for the program should be available by April 8, Turnquest concluded.