Gowon Bowe, chairman of the Clearing Banks Association, voiced reservations about the proposed corporate minimum tax, suggesting it could lead to an inequitable two-tier banking system.

Speaking to Tribune Business, Mr Bowe Bowe said the tax, which targets large multinational enterprises, will apply only to foreign-owned commercial banks.  

“There are some very peculiar influences that will have to be addressed. In my industry, you will have the likes of the Canadian and US-owned enterprises like RBC, Scotia Bank, CIBC, City Bank, that will be covered; but then you’ll have the Bahamian entities, Fidelity, Bank of Bahamas, Commonwealth Bank that will not be covered,” Mr Bowe said. 

He questioned the viability of such a system, asserting, “Can you have a basically a two-tier system, one for domestic commercial banks and one for internationally owned commercial banks? I think the answer to that is no.”

The draft bill for the Pillar 2 corporate tax, released by the Davis administration on Monday, proposes a 15 percent tax on profits for large multinational enterprises (MNEs) with at least €750m in annual turnover. 

This measure aligns with The Bahamas’ commitment as one of 140 countries that have agreed to the G-20/Organisation for Economic Co-Operation and Development (OECD) framework. 

The consultation period for the bill will end on September 16, with Parliament expected to review it on October 9.

Mr Bowe also expressed concern over the short consultation period, noting that the corporate minimum tax represents a significant shift in tax policy. 

“There are some concerns from the perspective that it is a relatively short consultation period with comments to be back by the middle of September, which, given this is probably the most significant tax legislative reform since VAT, it should be done in a very deliberate and comprehensive manner,” Mr Bowe said. 

He stressed the need for a thorough and inclusive approach, saying: “We need to make sure that we are holistic, comprehensive and collective in our efforts.”

He further suggested that the corporate minimum tax presented an opportunity to reform the country’s outdated business licence regime. 

“The truth of the matter is, the business license regime has been deemed antiquated and basically not fit for purpose for many years,” Mr Bowe said. 

He advocated for a more comprehensive overhaul of the tax system rather than incremental changes. “Ultimately, we’re seeming to pick around the edges and only comply with the minimum requirements globally, when the reality is The Bahamas could benefit from being more comprehensive and changing its overall taxation system,” he added.

Mr Bowe also raised concerns about the readiness of the Department of Inland Revenue to handle the new tax. 

“The devil in the detail is going to be some implementation issues that are going to have to be identified,” he said. 

“There’s going to have to be some practical considerations in terms of the readiness of the government’s Department of Inland Revenue, the systems that are going to be necessary for the reporting and uploads in order to be able to implement it and make sure that it is effective.”

Additionally, he  called for greater accountability from the government, suggesting the involvement of independent bodies such as the Fiscal Responsibility Council and the Auditor General. 

“Reality is we now need to start being more accountable to the people, not by the cliché of transparency and accountability, but by the actions,” Mr Bowe said. 

He urged for regular reporting and oversight, stating, “There should be an independent body like the Fiscal Responsibility Council, there should be the Auditor General, who should not be chastised and criticized every time that he has a negative report, but actually welcomed to say that these are the deficiencies that need to be addressed.”