By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian companies are increasingly fearful they have overpaid their Business Licence fees for 2025 given predictions that sales will plunge due to the economic uncertainty unleashed by Donald Trump’s tariffs.

Mark A Turnquest, founder of the 242 Small Business Association and Resource Centre, and a well-known consultant to the sector, told Tribune Business that many of his clients “are really concerned” that their Business Licence fee estimates and payments will be “incorrect” given the anticipated slowdown in global economic activity and consumer demand unleashed by the US president’s policies.

He asserted that top-line turnover, upon which Business Licence fees are based and calculated, will now “not even be close” to estimates already submitted to the Department of Inland Revenue (DIR) with many small businesses “scared as hell” about their prospects for the remainder of 2025.

Meanwhile Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told this newspaper that his group and others in the private sector had already warned the Government and tax authorities that requiring companies to effectively pay Business Licence fees in advance - based on estimated, rather than actual, turnover - was “a terrible idea”.

Agreeing that these concerns are now being exacerbated by the fall-out from Mr Trump’s tariffs, he argued it was “a recipe for disaster” and may force some firms out of business because they are having to “pay out monies they’ve not even earned yet”. The BCA chief, in a renewed plea for the Ministry of Finance and DIR to reverse course, asserted “it’s not good policy to make the business pay before they earned it.”

Accountants consulted by Tribune Business have confirmed that, in this yea’s Business Licence filings and fee payments, companies with annual turnovers of $250,000 and above were required to cover any difference between their 2024 estimated and actual turnover if the latter turned out to be higher.

And they were also required to estimate their 2025 turnover, and pay the Business Licence fee for this year, based on a forecast typically grounded on last year’s top-line revenue. But the March 31 filing and payment deadline occurred just before the US president unveiled a tariff strategy that sent the world economy and stock markets into turmoil.

While Mr Trump subsequently imposed a 90-day “pause” on these tariffs, with the notable exception of China, and multiple countries are said to be negotiating free trade agreements in a bid to escape these taxes on their exports to the US, considerable uncertainty remains over what will happen when this period expires. As a result, many Bahamian firms are bracing for a sales and turnover fall in the 2025 second half.

Tribune Business has received several calls in recent days from Bahamian small business proprietors voicing concern over the revised Business Licence filing and payment structure, which was introduced one year ago, with some unsure as to whether they will be able to meet the burden of having to effectively pay two Business Licence fees.

Mr Sands said the Department of Inland Revenue had previously advised himself and the BCA that companies would receive a credit applied to their future tax liabilities if turnover for a particular year turned out to be lower than predicted and, as a consequence, had overpaid on their Business Licence fee. However, he argued that this was inadequate as it does not compensate for cash flow taken out of a business.

Mr Turnquest added: “Sometimes as a business you cannot estimate what you are going to make, and I guarantee that if you were estimating before this tariff war started and you put your Business Licence fee in and it was accepted for this year, most of them will be incorrect because you will not make that amount of money.

“Our small business members are forecasting a decrease in sales based on their ability to buy stock as a result of higher inventory prices. They say the demand from customers is still there, but they are forecasting that summer Back-to-School, Black Friday and Christmas are not going to be as good as last year.

“They are already forecasting that. It’s a crying shame, particularly so early in the game, having survived through Easter.... This is the first time ever dealing with small business owners for them to forecast so far in advance a reduction in sales. I’ve never seen it. Small businesses are at the lowest end of the spectrum,” he said.

“I can tell you right now that customers and members have already said they are going to have a mediocre sales year. The three key seasons, summer with back-to-school, Black Friday and Christmas, a lot of them make 65 percent of their profit then. Sometimes it goes as high as 85 percent.”

Mr Turnquest continued: “The disadvantage comes for people who put their Business Licence in before April. Estimates before this tariff war started are not in our best interest, and the Government needs to rethink all estimates done before April. Most, if not all, of them are going to be incorrect. 

“Speaking to my clients and members, all of them are really concerned about their estimates because they are not going to be correct. Their 2025 estimates are not going to be correct; not even close, because everybody now is bracing and almost scared as hell because all of them thought 2025 was going to be the levelling off and getting back into profit making. This was an enforced error from Trump.”

Construction firms face particular challenges with the new Business Licence methodology due to their industry’s nature and the infrequency of work, with some companies going months before they win a new contract or work. As a result, while in a good year they may enjoy a multi-million dollar turnover, in an off-year they could earn very little, which makes estimating revenue and Business Licence fees very challenging.

Mr Sands, the BCA’s president, said that - after voicing concerns that “we expect most persons to overpay” their Business Licence fee - the Association was told by the Department of Inland Revenue that impacted companies in this situation would receive a credit against their future tax liabilities.

However, he argued this is inadequate on the basis that a tax credit is no replacement or substitute for cash flow being unduly removed from a business. And while cash can be used for multiple purposes, the Department of Inland Revenue’s tax credit is far more restricted and can only be used for one purpose - applied against future tax liabilities.

“The challenge with receiving a credit is that cash flow controls and runs your business,” Mr Sands told Tribune Business. “If I give you cash and you give me a credit, they’re not the same thing. I want equal with cash. That’s the first challenge. It does not help your business.

“It’s a terrible idea. It’s terrible. It’s not good to do it that way,” he added of the new Business Licence methodology. “The Chamber has spoken out about it, the BCA has spoken out about it, and we’d hoped they would have listened, but it seems now that the goal is to get these monies in advance based on what their cash position is, but it’s certainly going to impact the business community in a negative way.”

Agreeing that these concerns could be worsened by the Trump tariff fall-out, the BCA president said: “You’re paying out monies not even earned yet. That obviously impacts business cash flow negatively. No other jurisdiction does that.

“They want businesses to operate and to continue doing the business they are doing, but we are asking businesses to pay out in advance money that they have not earned yet. It’s a recipe for disaster. They cannot seem to understand it’s not good financial policy to make a business pay before it’s earned it.

“The honest truth is that not every business will be in a position to do that. You’re going to shrink the business community by some ‘X’ amount because you’ve decided to do this policy. It’s not good. It’s going to impact the gross domestic product (GDP) of this country,” Mr Sands added.

“I would hope the persons at the Department of Inland Revenue are smart enough to look at this carefully, look at the impact on businesses, and make it easier for persons to comply rather than make it harder for people to operate their business.”