By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s finance spokesman yesterday accused the Government of “stripping away one of the most fundamental protections in any democratic society” with its proposed Business Licence reforms.

Kwasi Thompson, the east Grand Bahama MP, told Tribune Business that the Business Licence (Amendment) Bill 2025 effectively takes away an enterprise’s “right to be heard” before the Ministry of Finance’s financial secretary revokes or cancels its Business Licence for violations such as breaching the country’s tax laws.

While the existing Business Licence Act 2023 allows Bahamian companies the chance to explain why their licence to operate, and engage in business activities, should not be cancelled prior to it being revoked, the new Bill presently before the House of Assembly stipulates that they can only challenge this after such action has been taken against them.

The present law, as stated in the 2023 Act, states: “The secretary shall, before suspending, amending, cancelling or imposing conditions or restrictions on a licence, afford the licensee an opportunity [to respond] to any complaint made against him and to explain why his licence ought not to be revoked, amended, cancelled or restricted.”

However, if passed into law as currently worded, the Business Licence Act reforms only mandate the financial secretary to “provide reasons in writing” to the affected company if he/she refuses to issue or renew a licence; suspend, cancel, revoke of amend a licence; and “impose conditions and restrictions” on a licence.

Only then can a Bahamian enterprise, and its proprietor(s) and management, “object to the decision” under the appeals process set out in the Business Licence Act. “The changes to section 25 (2) to the Business Licence Act will strip away one of the most fundamental protections in any democratic society, which is the right to be heard before you are penalised,” Mr Thompson argued yesterday.

“I am extremely concerned by this, and extremely surprised that no one in Cabinet made any mention of the removal of such a fundamental right. Specifically, what is presently in the Bill gives someone subject to their licence being revoked or cancelled the right to be heard before the Government takes that step. That’s in the existing legislation.

“It’s a fundamental principle of natural justice that I have the right to be heard before you penalise me and make judgment against me. I have a right to be heard. I’m extremely concerned at the step the Government is taking against small and medium-sized businesses.”

The existing Business Licence Act, well as the new Bill, give the financial secretary the ability to cancel or revoke a company’s Business Licence for failing to meet all necessary terms and conditions, including “misrepresentation”; breaching tax laws and/or an agreement to pay outstanding taxes; failing to participate in business surveys. Failing to meet liquor licence requirements has now been added.

Meanwhile, Mr Thompson asserted that proposed reforms to the VAT Act effectively mean that Bahamian businesses will have to close down before they can claim a refund of VAT credits. He argued that the amendments, if passed into law, will “severely limit” the ability of companies to claim VAT refunds if these credits are not used up, and recovered, in the next tax reporting period.

VAT credits are generated when the amount of tax a company pays on its ‘inputs’, meaning goods and services used in the production process, exceed the amount it collects from consumers on its ‘outputs’. These are the finished goods and services it sells to end-users.

The present VAT Act stipulates that, if these credits are not totally used up as an input tax deduction in the next VAT filing period, be it monthly or quarterly, then the impacted company can apply to the VAT comptroller for a refund of any outstanding monies.

However, the VAT (Amendment) (No.2) Bill 2025, tabled in the House of Assembly alongside the 2025-2026 Budget, mandates that - if these credits are not exhausted in the following tax reporting period - a company can only claim for any “excess” after they have applied to cancel their VAT registration.

“The Comptroller must allow a claim for a refund where the registrant’s registration has been cancelled; the VAT return for the final tax period has been filed; and the Comptroller is satisfied that the registrant is entitled to the amount of the refund claimed,” the Bill states. And the time to claim for a refund has been narrowed from three years to one year after the “right to apply” was created.

“We also see section 56 in the VAT Bill, which severely limits the ability of businesses to receive their VAT refunds,” Mr Thompson told Tribune Business. “What the Government appears to be doing is saying that, when you business is being wound-up, that’s the only circumstance under which you are able to receive your VAT refund.

“We have some very serious questions with respect to this particular clause. The Government has to explain these changes that are being made. The Prime Minister, unfortunately, did not make any mention of this point [in his Budget communication]. That severely limits the ability to get your VAT refund. We are very concerned about that.”

Bahamian businesses have frequently complained that it takes months, sometimes even years, for the Government to pay legitimate VAT refunds. These VAT Act changes will reduce and significantly relieve the Government of this burden, but - if passed - they will likely exacerbate private sector cash flow woes caused by the amount of funds tied up in tax credits and refunds.

Mr Thompson also branded the 2025-2026 Budget as a “backward step for the ease of doing business” in The Bahamas. In particular, he cited the proposed VAT Act amendments that will - if they become law - effectively act as a new tax on expanding Bahamian businesses by preventing them from recovering VAT on inputs such as raw materials and equipment used in “major” construction worth over $1m.

“We are extremely concerned that this Budget really is a backward movement for the ease of doing business,” he blasted. “One of the first things that stood out to us would have been the changes in section ten of the VAT Bill, which spoke to businesses not being able to recover input tax credits and deductions for construction projects over $1m.

“It amounts to a new 10 percent tax on businesses involved in this type of development. It’s a backward step for economic progress, it’s a backward step for development, and it’s a backward step for construction companies and other companies with respect to moving their projects forward.

“It’s, in effect, a 10 percent tax that businesses are now going to have find and pay, because they will not be able to claim it back. It’s, in effect, a new tax that the Government has on developers over $1m. It’s a disincentive to businesses for them to proceed with any development over $1m,” Mr Thompson continued.

“It’s disincentive for those types of businesses that are moving forward with construction projects and expansion that is not for resale. There are many projects that are proceeding just to expand businesses. It’s adding a 10 percent tax on businesses that are moving forward with projects worth over $1m and they will not be able to claim or get that 10 percent back.”