2019/20 Budget Communication Final Budget Communication | Page 40

We are adopting a new approach that brings fairness to the system. We are adopting a
new way that positively shifts the overall value proposition of The Bahamas. Moving forward, it
does not matter who you are or where you reside: taxes are due on all business activity where the
benefits are derived inside The Bahamas. And, in order to encourage the export of services, the
Government is excluding revenue derived from export services from Businesses Licence,
consistent with the existing rules for Value Added Tax. This will apply equally, whether an
individual or entity is resident or non-resident.
These amendments to the existing Business Licence Act are exemplary of our
commitment to fostering opportunities for Bahamians. In particular, the fact that businesses or
individuals who provide services abroad will not be taxed for Business Licence or VAT purposes
acts as an incentive for persons to create businesses centered on those services, as well as removes
some barriers associated with our current export industry. In an age where technology is constantly
advancing and new markets are steadily emerging, it is more important now than ever to ensure
that our legislative and tax environment are accommodative yet robust and aligned with best
practices in the regulatory space.
As mentioned earlier, the amendments serve to create a new approach to how
government revenues are derived from the financial sector. We are confident that we have shaped
an enabling regime that permits the country to remain competitive in the provision of financial
services, even while removing the preferential exemptions that were previously given to
nonresident IBCs. In an effort to alleviate the notion of ring fencing, all banks—including both
domestic and what used to be offshore banks—will no longer be subject to Business Licence fees.
Instead, moving forward, all banks will be subject to supervisory fees and charges; those with
Bahamian dollar liabilities of over $100 million will incur a Domestic Systemically Important
Institution (DSII) levy of 0.3 percent per annum on the leviable amount, which will be payable to
the Central Bank of The Bahamas.
I want to note here, however, that this new arrangement will not mean that domestic
and international banks are now paying less in taxes because they are no longer subject to Business
Licence. In fact, the opposite is true. The new structure will actually result in a marginal increase
in the amount raised from these fees. What is changing is the administrative process in the
collection of these fees, in that the Central Bank will collect and then deduct its cost of regulation
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