BCCEC backs calls for 12 month delay to business license audit requirement

BCCEC backs calls for 12 month delay to business license audit requirement

NASSAU, BAHAMAS — The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) is urging the government to delay the implementation of the requirement for audits for businesses with turnover above $5 million for another 12 months, claiming that the April 2024  deadline is “too aggressive.”

“The requirement, which was passed in the 2023 budget, will require companies with turnover above $5 million to produce audited accounts by April 2024. The Chamber is of the opinion that this timeline is too aggressive for most of the impacted businesses,” said BCCEC Chairman Timothy Ingraham in a statement yesterday.

Noting that an audit demands that businesses maintain very detailed financial records, and these must be assembled over a period of time, Ingraham continued: “Many Bahamian businesses have not traditionally maintained this detailed level of financial records. A delay of 12 months will allow the impacted businesses to prepare these records. To force some businesses into an audit at this time could lead to many failed audits.”

He also noted that in previous discussions with the government leading up to the 2023 budget, The Chamber had urged the government to delay the implementation of this requirement to allow businesses time to prepare and is now renewing that call.

Ingraham claimed that the local audit sector is already challenged to meet the deadline for existing clients and this requirement at this time will add further stress to their resources. A one-year delay, he said, allows audit firms to ensure that they have the necessary resources available.

“Audits will add a significant expense to the costs of some of these businesses, with a typical audit costing anywhere from $20,000 and up. No doubt this expense will have to be passed on to the customer. Given the high cost of living Bahamians are experiencing now, this is not the right time to implement this requirement,” Ingraham added.

“The Chamber joins The Bahamas Institute of Chartered Accountants in calling for the government to delay the implementation of this requirement to allow for additional time to ensure a smooth implementation process. Many questions remain, which must be properly discussed and addressed prior to full implementation.

“The government has in its arsenal the tool of government audits by The Department of Inland Revenue which can be used to target those businesses which the Department suspects may be under-reporting revenue for tax purposes. This can be used for the next 12 months while discussions around the requirements for audits continue.”

In June 2023, the Prime Minister emphasized the Government’s commitment to fostering improved record-keeping practices among businesses and promoting proprietors’ responsibility for accurate reporting through an enhanced Business Licence reporting regime.

However, certain adjustments have been made to alleviate the regulatory burden on micro, small, and medium-sized enterprises (MSMEs) with annual turnovers below $250,000. These enterprises are now exempt from the obligation to maintain electronic records and obtain certification from an independent accountant for Business Licence renewals. The threshold for this exemption was raised from $100,000 to better support smaller firms. Instead, such businesses will be required to submit management accounts to verify their turnover.

Nevertheless, specific requirements apply to businesses falling within different annual revenue brackets:

  • Businesses with annual revenue between $250,000 and $499,000 must obtain accounting certification from an independent accountant.
  • Those with turnovers ranging from $500,000 to $2.499 million will need to provide a compilation report by an independent accountant.
  • Businesses generating revenue between $2.5 million and $4.999 million are mandated to furnish a review statement by an independent accountant.
  • Large taxpayers, defined as businesses with turnovers exceeding $5 million, must present audited financial statements prepared by an independent accountant.