Bahamas could gain $140m from 15% minimum taxation

Halkitis said of the impact from levying a 15 percent corporate tax on Bahamasbased subsidiaries of major multinational groups. “That could change as more analysis is undertaken.

“As we consider any changes we make, we remain satisfied that the 2024 deadline is not hard and fast, and as a country without corporate income tax there is a need to implement a legislative and administrative framework” to implement the 15 percent minimum rate.

The minister pledged that, despite the corporate income tax reform, the Government will seek to ensure that The Bahamas maintains its economic competitiveness through a tax system that stimulates both Bahamian and foreign direct investment (FDI).

But, warning that the 15 percent minimum tax likely represents only the start, not the end, of the OECD’ latest tax-related moves,

Mr Halkitis said the 750m euro threshold will likely be progressively lowered to capture more and more companies in the net with the Paris-based forum’s final destination likely a one-size-fits all global system where taxes and rates are the same across all countries.

“I think we should recognise that this is not the final salvo so to speak,” the minister added. “In my view this is a crack to open the door..... This is not the last, I believe, we will hear from the OECD on global tax. I believe their objective is to have one international tax rate.”

He repeated this assessment later on, adding: “My personal opinion, I think the objective is to have one international tax rate for everybody. I think this is a crack in the door. I don’t see it ending here. I see eventually a lowering of the threshold to try and have everybody have one tax rate.’

The 750m euro turnover threshold means that, at present, only Bahamasbased entities that are part of multinational groups with revenue above this level will be subject to the 15 percent minimum corporate tax. However, if this is lowered, more and more companies across all sectors face being caught in the net.

Ryan Pinder KC, the attorney general, warned in a recent address: “A corporate income tax is clearly a novel approach in The Bahamas and will have significant regulatory reform for the country in tax administration, affecting almost every area of the cross-border economy.”

And the Ministry of Finance, in a paper on the issue released last year, said: “The imposition of a corporate income tax would necessitate a significant reform of Business Licence fees, very likely including the elimination of the turnover-based annual fee for the vast majority of Bahamian businesses. As such, the net annual revenue gain from a new corporate income tax would most certainly be significantly reduced.”

The Government is due to shortly launch a wideranging public consultation that, while addressing the 15 percent minimum tax issue, will also look at the options for a broader and more comprehensive overhaul of The Bahamas’ taxation system. Several observers have argued that moving to income-based taxes, and away from the current regressive consumption-based structure, will introduce greater equity and fairness as taxes are linked to ability to pay.

“We don’t have that tradition of net taxation. The taxation we have on the corporate sector is the Business Licence fee,” Mr Halkitis said. “There is no taking into consideration expenses etc. The recurring excuse used over the course of our history is we did not have the expertise or administrative capacity to do audits and verification.”

He added that implementing any income tax-based system, such as the 15 percent minimum corporate version, “won’t be easy” for The Bahamas to accomplish and will “require tremendous investment in capacity building and training of individuals” in taxation.

Kevin Moree, attorney and partner at McKinney, Bancroft & Hughes, told the panel discussion that implementation of the 15 percent minimum corporate tax at the current turnover threshold was unlikely to have a negative impact on the Bahamian financial services industry.

“I’m not sure there’s going to be a massive effect on the financial services industry here,” he said. “I don’t think we’ll see clients and financial services providers flee the jurisdiction because we’ve signed on to this.” He argued that more

Gas station operator’s relief faith ‘now 120%’

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Bastian declined to comment on the specifics of what was discussed, or the potential relief on offer from the Government.

However, while the Prime Minister and other Cabinet ministers reiterated that they will not permit the retailers’ long-sought after margin increase for fear of the impact it will have on families and businesses already struggling with the cost of living crisis, they indicated their willingness to undertake a wide-ranging review of the petroleum sector’s cost and pricing structure.

This would likely not be confined to retailers, but also analyse the wholesale level (Esso, Rubis and Shell) too. And Michael Halkitis, minister of economic affairs, yesterday suggested the Government may also explore the “central purchasing” used by other Caribbean countries.

“We resolved to look at the entire model,” Mr Halkitis said. “Certain Caribbean countries have a system of central purchasing. We want to take a look at that and see if that is suitable in our environment. And we just want to look at the entire chain - from wholesale straight down to the consumer and just examine it.

“So there’s nothing we want to propose right now, but it’s just some other options that we’re looking at. And I could tell you that, you know, if you look right down the chain, everyone is going to say they’re under pressure. The overall concern of the Government is anything that would cause an immediate increase in gas at the pumps for consumers.

“And, as you know, it’s not only consumers but business people, for example, who have vehicles, and so any of those increases would trickle right down”. Mr Halkitis said the Government is sympathetic to the rising costs the dealers are facing, and said: “We understand their plight, and they are under a lot of pressure. They are faced with things, those who are leasing premises, for example, are faced with very high rent and other associated fees.

“And they are faced with rising costs, as everybody in the economy is, and so they are being squeezed. We reiterated to them that we are sympathetic; sympathetic to their plight. As far as we can, we have brought relief in the past, and we will see how we can bring it in the future.”

“There’s no easy solution. We just want to reiterate to the petroleum dealers that we are not unsympathetic. We are sympathetic to their plight, and their issues range from rents to franchise fees to bank charges to being charged to deposit cash, and they’re a cash intensive business,” Mr Halkitis said.

“Credit card fees and any number of things increasing including the private arrangements that they make with their own wholesalers. And so, again, we don’t think that the simple solution is just to increase the margin because you pull one thread and it has it has impacts all straight through.”

The minister said the retailers have submitted proposals for the Government to review, and it is looking at the entire distribution chain when considering a relief

NOTICE strategy. “They presented us with a proposal. We will study it, we will resolve to look at the entire system of how fuel is purchased by retailers, and then resold to consumers.

NOTICE is hereby given that JENIKA NOCIUS of #2 Garden Hills, P.O. Box N-902, New Providence, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/ naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twentyeight days from the 8th day of March, 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

NOTICE is hereby given that ISMANETTE DEMOSTHERNE of Brougham Street, New Providence, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/ naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twentyeight days from the 15th day of March, 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

“So the entire importation, the wholesaling and down to the retailing, and what can be done anywhere along that chain to bring some relief to them. We agreed to in about a week-and-a-half come back together where we can have some concrete proposal.

But once again, you know, our overriding position is we don’t want to do anything that leads to a direct increase in prices at the pump at this time” pertinent questions are whether the Bahamian government will get to collect this tax itself and how the proceeds will be spent.

Questioning whether the funds would be reinvested into boosting the financial services industry and ease of doing business, or be placed into the Consolidated Fund, Mr Moree also warned that if the Government sought to go beyond the G-7/OECD demands and conduct a “general overhaul” of the Bahamian taxation system then it would “require a ton of work, a ton of expertise and a ton of time”.

He added that the Department of Inland Revenue would also have to focus on becoming responsive in addressing taxpayer questions and concerns, given the complexity of calculating the amount of income tax owed, as opposed to just concentrating on revenue administration and collection.

The Prime Minister reiterated that the Government is sympathetic to the retailers, and said he is confident a solution that is mutually beneficial will be found.

Philip Davis KC said:

“The retailers have serious issues concerning their survivability in the context of what’s happening worldwide. A lot of the challenges that they face I’m sympathetic to, and I understand their need to survive. I ask them to give us another two weeks to assess the situation, see how we could help them.

“The challenge we have is how we prevent further burden on the travelling public. And we need to see how we could delicately balance bringing relief to them and, at the same time, not overly burdening the consumers. But I can say that the meeting that we had for several hours yesterday [Monday] was fruitful. I think that we’ll be able to arrive at a solution that serves the common good of all.”

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