Bahamian companies yesterday hailed “a big leap” forward if the Government delivers on its pledge to enact ease of business-friendly incentives alongside corporate income tax reforms.

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that this country’s ease of doing business remains “the elephant in the room” hindering growth and job creation after Chester Cooper, deputy prime minister, said the Government is working on legislation to help address this.

“I think we all agree that the ease of doing a lot of things here is challenging,” the BMDA chief said. “Business is definitely difficult, there’s a lot of hoops to jump through and a lot to navigate, and I’m sure a lot of young people coming into it get discouraged and frustrated dealing with it.

“We all know it’s the elephant in the room. We’ve always in The Bahamas been rated as challenged when it comes to the ease of doing business. I’m hoping that whatever is being proposed has some teeth and does what it’s stated to do because it’s difficult.

“I feel I almost have to be an attorney, a compliance officer, an accountant. You have to know a bit of everything to keep up with what’s happening. Hopefully it’s something the Government can give consideration to and it makes a difference. I often said that if I didn’t have to do this, I wouldn’t do it,” Mr Albury continued. “It would be a big leap if this is something that has some substance and can improve things.”

When asked what specific improvements he would like to see, he added: “General day-to-day things, and being able to get quicker and faster responses from various [government] departments. That would be the most important thing. There’s a lot of changes that have been implemented, some good, some bad, but it can be difficult keeping up-to-date with what’s presently the norm.”

Mr Cooper, in tabling the Bill to give effect to the 15 percent minimum corporate tax in the House of Assembly yesterday, promised it will be accompanied by incentive-based legislation designed to address long-standing concerns regarding the ease and efficiency of doing business in The Bahamas.

The Domestic Minimum Top-Up Tax Bill 2024 removes the possibility of double taxation for companies that qualify for the new levy by eliminating the need for them to pay Business Licence fees as well. Only companies that are part of corporate groups with annual turnover in excess of 750m euros will, at present, have to pay corporate income tax on their profits.

Referring to the consultation paper on the Domestic Minimum Top-Up Tax Bill, the deputy prime minister said: “The consultation paper foreshadowed the Government’s intention to introduce some form of incentives to reduce the cost of doing business in The Bahamas. These incentives will be laid out in a companion piece of legislation.

“These incentives would, when introduced, impact all businesses - not just businesses which qualify for the Domestic Minimum Top-Up Tax. In this respect, the Government within this year and prior to any tax becoming payable under the Domestic Minimum Top-Up Tax would introduce legislation that will lay out the framework for such incentives in a manner that will qualify under the” OECD rules.

Mr Cooper added: “In the consultation process with the Domestic Minimum Top-Up Tax, several respondents suggested that any new incentive regime be aligned with attracting new business development in key economic activity, namely headquarters, tourism, finance, technology and energy.

“And, in this regard, consideration could also be given to incentives associated with employment, capital expenditures, training, local content spend, research and development costs, the creative industries and extra- territorial turnover.

“The Government acknowledges the importance of developing this new regime, which would need to apply broadly across businesses in The Bahamas. Consequently, the view was taken that a separate Bill be crafted to reflect the final position of the Government and submitted for consideration during the mid-year Budget exercise.” That takes place towards the end of February.

The Government has estimated that it could earn as much as $140m in annual revenue from the 15 percent corporate tax once it has been in effect for a full year. Mr Cooper yesterday sought to soften the tax reform blow by pledging that the proceeds will be used to reduce the $11.5bn national debt and tackle the ongoing cost of living crisis.

“This Bill seeks to introduce an effective tax rate of 15 percent for in-scope multinational enterprises operating in The Bahamas that have annual consolidated revenue of or above 750 million euros or approximately $818m. At this threshold very few Bahamian-owned and operated businesses would be impacted,” the deputy prime minister added.

“In addition, with the passage of this Bill, The Bahamas would be allowed to retain tax revenues on profits of these entities that would otherwise be subjected to top-up tax in another jurisdiction under the OECD’s Income Inclusion Rule or the Under Taxed Profit Rule.

“As a matter of policy, this administration has already stated that the lion’s share of revenue from this Bill would be dedicated to debt reduction and reducing the cost of living for ordinary Bahamians.”