By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior Department of Inland Revenue executive is hoping 80-85 percent of Bahamian companies met Friday’s Business Licence filing deadline so that financial penalties are kept to a minimum.

Dexter Fernander, the Department of Inland Revenue’s operations manager, told Tribune Business he was seeking a high compliance threshold from the private sector as he confirmed many businesses had waited “until the last minute” to submit their actual turnover figures for 2024 and estimates for 2025.

Speaking prior to “running the system” and seeing how companies met the January 31 deadline, he said: “It’s been a typical pace, including coming at the last minute and changing their representatives. A lot of people are switching the representatives they have in their system; a combination of accountants and lawyers, and asking for them to get access to the system themselves.

“That’s very interesting, but we’re accommodating them once we get a letter to deactivate the previous access points.” As for the tendency of many businesses to wait until the end-January deadline to file their Business Licence returns, Mr Fernander added: “I don’t understand that culture. I guess it’s ‘I’ll wait until this day and pray everything is right with the system.

“We haven’t had any indication that people have had problems with the system. Hopefully, when we run the system, we will see 80-85 percent compliance. Hopefully we won’t have many penalties for late filings.” Tribune Business was unable to reach Mr Fernander subsequently to determine how many businesses out of the anticipated 65,000 filers had met the deadline, with 26,000 having done so as at Wednesday.

Meanwhile, Mark Turnquest, a small business consultant and the 242 Small Business Association and Resource Centre’s (SBARC) founder, told Tribune Business that the turnaround time for Business Licence issuance has “improved tremendously” this year for companies with annual turnovers below the $250,000 review threshold.

Disclosing that this has been slashed near seven-fold, once all necessary documents have been submitted and the tax authorities are satisfied, he said of his clients and members: “They indicated that it’s going smoothly. Once they’ve submitted it you’re looking at no more than three days at the most to get the certificate. The renewals are taking no longer than three days.

“Their turnover amount is is under $100,000. Even when I put mine in, they asked me for my income statement, I put it in and got it very quickly. I got it in two-and-a-half days. Last year I got it in 14 days. It has improved tremendously, which is very important because I ain’t got the kind of time to mess around with that.”

Mr Turnquest added the Business Licence filing process had improved by “75 percent” compared to 2024, which was the first year using the Department of Inland Revenue’s new online portal and the new fee structure and verification requirements.

“I ain’t going to lie to you; last year it was difficult,” he said. “How they changed over to the new system, it was very difficult. You had to do all your filings with kung fu, looking at the actual turnover for the previous year and estimated turnover for next year. People were not used to the process.

“Last year they changed the system and made it very difficult. This year was easier because they produced a lot of visuals and information, and a lot of people got over the hiccups. It was three-quarters, 75 percent, more difficult last year.”

The 242 Small Business Association founder said “the vast majority” of his clients and members, some 75 percent, fall below the $250,000 annual turnover threshold and, as a result, only have to provide statements verifying top-line gross revenues for Business Licence purposes. As a result, they simply needed to access Quick Books and point-of-sale data to verify their sales and upload this to the online filing portal.

Those with turnovers between $250,000 and $5m have to undergo a review by a certified accountant, while above $5m requires audited financial statements. Mr Turnquest said the process is also more difficult for start-ups than those seeking renewals because they have to provide three different trade names, plus obtain proof of compliance from agencies such as NIB and Department of Physical Planning.

“Small businesses get into trouble when they are deceptive and lie about their sales,” he added. “If you’re in a high gross turnover industry, such as shipping, and and say you’re making under $100,000 that’s definitely a lie.”

Mr Turnquest also backed expanding corporate income tax to the entire domestic Bahamian economy, rather than just those which are part of multinational groups with an annual turnover above 750m euros, as a replacement for the existing Business Licence regime.

Many businesses view the tax as unfair and distortionary, as its turnover-based structure typically penalises high turnover, low margin businesses such as food stores and gas stations, with a higher tax burden compared to low turnover, high margin businesses. The Business Licence fee can also tax companies into losses and result in them paying more in taxes than profits earned, meaning they are effectively working for the Government.

“You could have high gross sales and a big time loss for the year,” Mr Turnquest added.”You could do that. You may have high turnover but a net loss. If you have that, you are still expected to pay your Business Licence on that. It should be 15 percent on your net income. That’s what we call a progressive system.”

Besides last year’s consistent difficulties in accessing the Department of Inland Revenue’s portal, which was frequently down or off-line due to insufficient bandwidth to accommodate user demand, companies also complained that the tax authority was either not responding to calls or messages or failing to provide the answers/information they were seeking in response to their queries. This year, though, appears to have sparked improvement.

Mr Fernander last week said the Business Licence filing process - which required companies to submit both their actual and estimated turnover for 2024 and 2025, respectively, by January 31 - appears to be functioning more smoothly for both the tax authority and corporate Bahamas the second time around.

“We had a new system last year and the learning curve is much easier with the same process,” he added. “We haven’t done anything. Nothing has changed. We’ve placed more information content on how to do it on our website and sent it out on e-mail.”

“As of today, maybe 39,000 are still pending and the deadline is January 31,” he said last Wednesday. “We’re at the half-way mark.... Other than that [challenge with e-mail contacts] we are ahead of the game. Those low risk companies and entities, as they submit, if they are under $100,000 in annual turnover there is no reason to hold up on their licence as long as they don’t hit any of the high risk factors.”