NASSAU, BAHAMAS – In an effort to satisfy and comply with international tax standards outlined by the European Union (EU), some Bahamian business owners will experience a change in their annual business license fees this year, according to Peter Turnquest, Deputy Prime Minister and Minister of Finance.
“It is important to point out that the new regulatory regime for financial institutions, and the planned changes within the business license regime, are not expected to have a material impact on what respective businesses currently pay into the Public Treasury in terms of regulatory and business fees,” Turnquest noted.
“The changes are intended to be revenue neutral and the financial sector will continue to bear its current fiscal obligations. This will not be passed on to any other sector or segment of the economy.”
The new scheme, which took effect on January 1, has been rolled out in the form of a value-added fee, Turnquest revealed.
According to the finance minister, some business owners will see a change anywhere between zero per cent to 2.5 per cent in their business license fees depending on, “any positively rated tax supply,” made in any given year.
The finance minister announced Thursday that the changes to business license fees are an effort to remain compliant and satisfy the requirements of the European Union.
He said the government has established a new framework for the financial sector following the recent passage of a compendium of bills aimed at keeping The Bahamas off the blacklist and fully compliant with international tax standards.
“Moving forward, the company’s business license fee will be calculated by reference to the value of any positively rated taxable supply made in that year charged at a rate between zero per cent and two and a half per cent of that value as may be prescribed by the minister of finance,” Turnquest noted.
The new framework also proposes that financial institutions; including banks, insurance companies and other regulated financial entities will be exempt from paying business license fees starting in 2020.
But there will be other fees including a sliding scale registration fee between $2,250 and $250,000 per annum.
“All financial institutions that are deemed systemically important, as determined by their degree of integration into the domestic financial system will be subject to an additional fee with respect of Bahamian dollar liabilities and contingencies,” he said.
“This reflects the need to mitigate the threat that any domestically systemically important institution can pose to The Bahamas’ entire financial system.
“Also, any bank wishing to access the domestic payment system and/or wishing to operate as an authorized agent for Bahamian dollar transactions will be charged fees reflecting the substantial supervisory and management costs for these arrangements for the Central Bank of The Bahamas and other public-sector agencies.”
Turnquest stressed that the new changes are vitally important.
“This removes the appearance that there is preference for one sector over the other. So, now you have a level playing field between the offshore sector and the domestic sector,” Turnquest explained.
Turnquest said over the coming months the government will make the necessary legislative amendments to allow for the implementation of this new framework.