NASSAU, BAHAMAS — Deputy Prime Minister and Minister of Finance K. Peter Turnquest said The Bahamas has several structural impediments that make it difficult for the country to compete globally in the export of goods.
“We all know the barriers caused by the high cost of electricity and labour, as examples,” the DPM said at the Government’s Industry Briefing held at the British Colonial Hilton on Thursday.
“We have several competitive niche areas as a country and we capitalize on those, but there is another export market that is under explored, where we can more effectively compete on an even footing,” Turnquest said.
“That is the export of services: Accounting services, legal services, information technology services, management consulting services, and of course, financial services, just to name a few.”
The DPM explained that consistent with the recent legislative change to equalize the playing field for Bahamians in removing preferential exemptions for non-residents, the Government is implementing a broader policy of incentivizing the export of services across the board for all Bahamians. Revenue derived from these services will not be taxed for business licence purposes or VAT, which makes it easier for Bahamians to compete on a global scale.
“In this digital economy, export services are growing rapidly and we do not want Bahamians to be constrained within our territorial borders,” he said.“In fact, we want to incentivize them to build clientele on the international market, taking advantage of all the business opportunities that can be delivered through a mobile device or on a computer.”
DPM Turnquest noted that as Bahamians increase their skill sets and expand their reach, there will be increasing opportunities to participate in the export economy.
He said for the past 50 years the Government approached regulation from the standpoint of whether an individual or entity was resident or non-resident.
“This legal framework of privileges and benefits to non-residents was inherited many decades ago. It served its purpose at the time as a way to encourage the inflow of foreign exchange. However, today, it does not work.
“We are adopting a new approach that brings fairness to the system. We are adopting a new way that positively shifts the overall value proposition of The Bahamas’ financial sector. We are implementing a new framework that increases the ease of doing business.
“All together, this means we faced the daunting prospect of change in the industry and instead of being paralysed by the prospects; we created a framework of transformation for the country.”
He explained that moving forward, it does not matter who you are or where you reside: Taxes are due on all business activity where the benefits are derived inside The Bahamas.
Furthermore, in order to encourage the export of services, the Government is excluding revenue derived from export services from businesses licence, consistent with the existing rules for VAT.
This will apply equally, whether an individual or entity is resident or non-resident.
The DPM said, “We first introduced this thinking when we enacted the VAT Act, with its provisions for zero-rated goods and services; they already apply to business activity outside of The Bahamas.
The DPM said, “Streamlining the treatment of VAT and Business Licence makes it easy for businesses to implement these new rules, because they have already done the analysis for the purpose of VAT. Moving forward, they will apply the same type of calculations to determine export turnover for the purpose of business licence. Essentially, if you do not pay VAT on it, you do not pay a business licence on it.”
This article was written by Llonella Gilbert – Bahamas Information Services.