OPPOSITION CONCERNED ABOUT GLOBAL MINIMUM CORPORATE TAX REVENUE

Feb 26, 2024

February 18, 2024

The Opposition was pleased to meet with officials from the IMF technical Team and the Ministry of Finance officers for further discussions on the Government’s commitment to the Global Minimum Corporate Tax.

The previous FNM administration signed on to the Corporate Minimum Tax in 2020 as part of the OECD’s Base Erosion and Profit Shifting initiative to combat tax avoidance by such entities. The Government has indicated its preference for Pillar 2 as outlined in the taxation green paper circulated last year, which requires that all multi-national firms operating in the Bahamas with revenues over $750M Euros annually, submit to a 15% Corporate Minimum income tax on income generated in the jurisdiction.

The opposition reiterated that given the country’s express commitment to the Global Corporate Minimum Tax initiative made under the Free National Movement, the appropriate legislation and enabling framework to cover qualifying firms has not yet been established and circulated for consultation. Our understanding is that this would be revenue positive for the country as this would require massive multinational companies which generate revenue in The Bahamas to pay the proportional tax share inside the country.

We are very concerned that if other countries have adopted this global initiative as of January 2024 and the Bahamas does not have the infrastructure to collect taxes from these multinational companies operating in the Bahamas with revenues over $750M Euros annually, these taxes which could have been paid to the Bahamas Government will now be collected by foreign countries.

As we have in our formal response to the Government’s Green paper*, the Government must also reform of the current business license regime that would abolish the current arrangement that is based solely on gross receipts. The reformed tax regime should seek to eliminate taxes on audited businesses posting losses, and at the same time reduce the unfavourable treatment to high turnover/low margin businesses when compared to low turnover/high margin businesses.

We believe for Bahamian Micro businesses with turnover under $100,000 per year should not be subject to any form of business license fees or taxes.  Bahamian small businesses with turnover under $1 million should have as an option the ability to pay a straightforward set fee based on a structured tier.

Finally we maintain that a revised business tax must be structured in a way that allows for some measure of tax relief when businesses seek to expand their operations, support key civic initiatives and provide employment for specified disadvantaged indivuals.**

Hon. Michael C. Pintard, M.P.

Leader 

Free National Movement

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