NASSAU, BAHAMAS — A senior top accountant yesterday warned there are concerns within the business community over the level of taxation in the country, urging the government to avoid "double taxation" as it looks to introduce income tax.
Prince Rahming, the PwC Bahamas territory leader, while speaking at a press conference to preview the Bahamas Business Outlook conference, said that there is "a lot of anxiety" regarding the government's full audit requirement for businesses with turnover above $5 million for another.
Both the Bahamas Chamber of Commerce and Employers Confederation and the Bahamas Institute of Chartered Accountants have urged the government to push back the April 2024 deadline for that requirement another 12 months.
"There is a lot of anxiety within the business community these days as a result of the passing of the new legislation on July 1, 2023, as well as the clarifications put forward by the Department of Inland Revenue," Rahming stated.
"The profession has delved into it and has been working with the Department of Inland Revenue to realize its objective. Is it going to be smooth sailing? I don't believe so. Some firms have not had an audit thus far and there will need to be a whole lot of work in and around that."
Rahming, while noting that his firm works with many of the "big players," particularly in the tourism sector, added: "If I were to take the conversation slightly further, there are some concerns over the level of taxation in the country, and with corporate income tax on the horizon there is often a discussion I have with my clients in the tourism space in particular as to what taxes will be removed in the place of corporate income tax.
"One of them might be business licenses because business licenses tax the taxpayer at the top line, and income tax is at the bottom line. We should try to avoid double taxation and I'm hoping the government is thinking through that. When income tax is introduced, there will need to be a choice at that stage to not over-tax and steer investors from coming and those who are here from investing," Rahming said.
Last May, the Ministry of Finance released a Green Paper presenting four corporate income tax strategies for The Bahamas.
The strategies outlined in the Green Paper are as follows: Option 1 applies the OECD's 15 percent minimum tax rate to multinationals earning over 750 million Euros. Option 2 adds a 10 percent rate for other firms. Option 3 includes a 12 percent rate for firms above B$0.5 million while maintaining the business license fee (BLF) for firms below this threshold. Option 4 enforces a 15 percent corporate income tax for all firms, except those below B$0.5 million, which would be subject to a 10 percent rate
Back in July 2021, The Bahamas became one of over 138 members of the OECD's Inclusive Framework that agreed to support the implementation of the Pillar Two tax reform, under which all multinational entities with revenues of 750 million euros or higher will be subject to a minimum effective tax rate of 15 percent in each jurisdiction in which they operate.
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