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News Article

February 03, 2011
Call for safeguards against firms failing to pay their bills

A $250,000 loss incurred by a leading engineering company has sparked the principal of the firm to call for more safeguards for local businesses.
It’s important, said head of Islands By Design (IBD) Keith Bishop, for Bahamian businesses to be protected from companies they render services
to which are unable to pay their bills. The frequency of these occurrences, he said, counters the intent of foreign direct investment (FDI) in
increasing opportunities for local businesses.
“I fly all around The Bahamas and you see countless failed developments,” he told Guardian Business yesterday. “There is some level of due diligence of course, but if a guy comes in and flatt ...

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News Article

May 05, 2014
DPM: Two firms in running for BEC reform

The government has narrowed the number of potential companies that submitted proposals for the Bahamas Electricity Corporation (BEC) restructuring deal down to two, according to Deputy Prime Minister Philip Brave Davis.
In March, it was reported that accounting firm KPMG had made recommendations and given the government an assessment of all bidders.
However, it remained unclear how many bidders had been forwarded to Cabinet for consideration.
Davis, whose portfolio includes BEC, said in a recent interview with The Nassau Guardian that he hopes to reach a decision on the matter before the government begins debate on the new budget.
The government is expected to begin debate on the 2014/2015 budget at the end of this month.
However, Davis said, "We are not going to rush to that decision."
On March 30, Davis said negotiations had been completed.
He said at the time, that Cabinet was expected to deliberate on the bidders and "know whether the government has accepted any of the options" within two weeks.
Davis previously said the government may not select any of the bidders.
He has also suggested that the government may only engage one company to assist reforming the energy sector.
Asked whether the two companies before Cabinet is any indication of the government's intentions, Davis did not respond directly.
"That proposition is still under consideration, whether we go with one or two," he said on Wednesday.
It also remains unclear whether BEC will remain unified or be split into two companies as originally indicated.
Some observers have said the deal and reform process is four months overdue.
Last August, Prime Minister Perry Christie revealed the government's plans to engage private companies to offer power generation for BEC and gain a management contract to take over transmission, distribution and customer billing.
At the time, Christie said the contract with prospective companies would be signed by the end of last year.
Both Davis and Christie have pledged that the deal will be transparent, amid criticisms from the Free National Movement and Democratic National Alliance about the transparency of the deal.
Davis has promised that government will consult the public before any decision is made.
"The word transparency is a political appendage that one seeks to pull out of the hat whenever there is need for attention, that's what I see," he said in March.
"I mean at the end of the day, the Bahamian people will be fully informed about what is happening and has happened and the timeline."

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News Article

May 21, 2012
Prime Minister Harper confirms firm end to Canada's military mission in Afghanistan

Chicago, Illinois - Prime Minister Stephen Harper today confirmed
that Canada's military mission in Afghanistan will come to a firm and
final end once the current training mission concludes on March 31, 2014.
The Prime Minister made the announcement at the North Atlantic Treaty
Organization (NATO) Summit in Chicago.

"For more than a decade, the brave men and women of our Canadian
Armed Forces, the RCMP, and many dedicated public servants and civilians
have made enormous sacrifices to assist the Afghan people," said the
Prime Minister. "Canada will honour its commitment and complete its
current training mission but our country will not have any military
mission in Afghanistan after March 2014..."

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News Article

February 24, 2011
Three firms take legal action against Customs

FREEPORT, Grand Bahama - Three companies are taking legal action against the Department of Customs over its decision to require Grand Bahama Port Authority (GBPA) licensees to obtain a letter of good standing from the National Insurance Board (NIB) to receive authorization to purchase goods in bond over the counter.
An application for leave to bring judicial review proceedings against the comptroller of Customs was filed yesterday by Smith Point Limited, Callenders and Co., and Bahamian Outdoor Adventure Tours Limited on the grounds that there is no lawful basis on which Customs can impose such a requirement on a licensee before issuing an over-the-counter letter.
The application, filed by attorneys o ...

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News Article

February 09, 2011
BSE head hopes local firms have large role in Arawak Cay project

The head of the Bahamas Society of Engineers (BSE) is optimistic that Bahamians in the profession will have a good share of work in the $65 million Arawak Cay Port Development project, pointing out that local engineers are adept enough to take on the task.
Robert Reiss told Guardian Business yesterday that the work could be carried out by local engineers and the government doesn’t have to rely heavily on international contractors. “I would think that a large portion of [the Arawak Cay Port Development] if not the vast majority of that can be done by Bahamian engineers,” Reiss said. “The designing of buildings and structures, we have that handled wi ...

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News Article

February 22, 2011
'20-30' contract value loss if given to foreign firms

By NEIL HARTNELL

Tribune Business Editor

Between 20-30 per cent of the contract value leaves the Bahamas when construction projects are given to foreign contractors, the Bahamian Contractors Association's (BCA) president telling Tribune Business that the $400 million worth of work pledged to Bahamians by Baha Mar would "have a profound trickle down effect into our economy".

Explaining that this $400 million would be paid directly to Bahamian contractors, large and small, by the $2.6 billion Cable Beach developer, Stephen Wrinkle said that if the same sum was paid to foreign contractors, only around $300 million at best would find its way into the Bahamian economy - a difference o ...

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News Article

March 21, 2012
Roadwork hit firms: 'It's never too late to do the right thing'

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government's plans to provide assistance to businesses impacted by the New Providence Road Improvement Project was hailed as a good move yesterday, with Coconut Grove Business League (CBGL) spokesman, Ethric Bowe, telling Tribune Business: "It's never too late to do the right thing."

Speaking after Prime Minister Hubert Ingraham announced the first concrete steps towards compensation, with Ministry of Finance personnel delivering survey questionnaires to all impacted businesses, Mr Bowe said: "I am hopeful and trying to keep an open mind about it.

"I think now they realise the extent to ...

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News Article

March 29, 2011
1 in 10 reverse mergers of Chinese firms on US stock exchanges fraudulent

At
least 10% of Chinese companies that have gone public on stock
exchanges in the United States are engaged in fraud. The deals often

involve establishing offshore holding companies in the British Virgin
Islands, Cayman Islands, Samoa or another offshore jurisdiction in
order to conceal illegal conduct.

The startling claim, following extensive research, was made to OffshoreAlert by Sharesleuth.com, an investigative news web-site controlled by well-known American businessman Mark Cuban.

"Upwards of 400 Chinese companies have gone public on U.S. exchanges through reverse mergers," says Chris Carey, Editor and President of Sharesleuth.com. "We've identified at least 40 deals - or fully 10 percent - that have involved some degree of fraud or deception...

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News Article

June 17, 2011
Trust expert suggests tax on foreign financial services firms

The idea of directly taxing foreign financial services companies plying their trade and earning profits from The Bahamas may be gaining some traction in the industry, with an expert calling for a serious investigation into the option.
Adrian Crosbie-Jones, managing director of the Private Trust Corporation Limited (PTC), raised the corporate tax matter before attendees of the Nassau Conference on Wednesday.  Crosbie-Jones said that foreign financial institutions are already taxed on their Bahamian profits, at rates in the 25 to 35 percent range.
"The only problem is that tax is not paid here," Crosbie-Jones said.  "The tax is paid somewhere else.  So the Swiss get the benefit of the profits generated in The Bahamas that are ultimately repatriated back to Switzerland and as a result the Swiss taxpayer has a reduced tax to pay because of the endeavors of Bahamians.
"We've got to start looking at perhaps ways where The Bahamas can benefit and participate to some extent in part of that tax."
The net effect on taxes foreign corporations pay would have to be neutral, at least, Crosbie-Jones told Guardian Business yesterday.  If implemented properly he said such institutions could find they actually improve their profitability, while the country benefits from increased tax revenue receipts.
Though it may seem counterintuitive that such businesses could potentially earn greater profits under such a corporate tax system, Crosbie-Jones explained that the way Bahamian business license fees are handled creates the opportunity. Although the business license is now a tax, it is calculated based on turnover and taken out before net profits are deduced.
For illustration, if a company made $100 in gross profit and had a $5 charge for business licence fees as its only expense, it would book $95 in net profit.  Whenever those funds are ultimately repatriated and taxed, it may pay 30 percent or $28.50 to some other country.  Earnings after taxes would come in at $66.50 in this scenario, The Bahamas taking home $5.  If there was no business licence tax but The Bahamas took 10 percent of net income and the foreign company 20 percent, the company's earnings after taxes move up to $70, The Bahamas' take improves to $10, and the foreign state gets $20.
The example is oversimplified, but the underlying point stands - more government revenue and possibly greater profits for institutions through sharing the tax on net profit. The numbers are small for illustration purposes -- foreign financial institutions may together book hundreds of millions in profits any given year.
Other jurisdictions already have such practices in place, according to Crosbie-Jones, who referenced financial centers like Jersey and the Isle of Man as examples. He said they use a zero/ten percent structure where foreign companies in the financial services industry pay 10 percent and local companies pay 0 percent. If implemented locally, such a regime would also need to exclude international business companies (IBCs) operating out of The Bahamas.  Taxing them could have a number of other negative implications for the industry, not least of them being a loss of competitive position and potentially the loss of the IBC business to other players.
The jurisdiction may even benefit from others recognizing that the business licence is in fact a tax, according to Crosbie-Jones.
"You have a form of corporate tax--you have business license," he said.  "If you were to call it corporate tax, which is in reality what it is, perhaps the whole world would perceive you in a different way."
The introduction of a corporate tax regime deserves serious investigation, according to Crosbie-Jones.  It would require thorough research, and ultimately the implementation of a network of double-taxation treaties to ensure that companies would not end up paying more than they would under the current regime.
The PTC managing director also said the jurisdiction may actually be more vulnerable by not having such a tax in place.  With global regulatory trends eroding privacy as a reason to use this jurisdiction for business, factors like reduced after-tax profits could cause companies to move to jurisdictions where their net take-home was higher.  It is a tide that The Bahamas may not be able to stand against, he cautioned, potentially threatening the entire industry.  Crosbie-Jones urged stress testing of how that and other developments could impact the industry as a whole.
Without a complete study presented to the government illustrating the benefits and measures for a successful implementation, Crosbie-Jones doubted that such talk would amount to anything more than talk.  He suggested that the intellectual and research resources of an institution like The College of The Bahamas could be harnessed to do the necessary ground work.
For all the challenges involved, however, the PTC managing director is convinced that what the government is earning from the industry is 'really nothing compared to what it could be making'.
"Another $100 million to government coffers could be quite dramatic," he said.
 

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