Nassau, The Bahamas – Prime Minister and Minister of Finance, the Hon. Philip Davis, has emphasized the importance of transparency and clarity in the debate on the Domestic Minimum Top-Up Tax Bill, 2024, in the House of Assembly, on November 6, 2024.
The Bill, Davis explained, was projected to generate revenues of up to $140 million to support “our transformative, people-focused agenda.” He clarified that the Top-up Tax, which is the first-ever corporate income tax introduced in The Bahamas, would raise revenues without negatively impacting Bahamian businesses.
The Domestic Minimum Top-up Tax applies only to multinational corporations operating in The Bahamas that earn over 750 Million Euros per year or more, which is equivalent to $800 million per year or more. If you do not own a multinational entity making 750 million Euros per year or more, this tax does not apply to you, Davis emphasized.
The Prime Minister noted that his administration has pledged not to introduce any major new taxes to place a further burden on the Bahamian people. He also highlighted that the vast majority of Bahamian people have experienced lower taxes in the past three years.
Davis recalled that his government lowered customs duties on a wide range of healthy and nutritious dietary staples, construction supplies, and a number of essential goods. The VAT rate was also lowered from 12% to 10% – a 20% reduction. Additionally, the threshold for paying real property taxes was increased from $250,000 to $300,000, benefiting many property owners.
The common thread connecting these reductions is that they benefit a wide cross-section of Bahamians, particularly lower-income and middle-income Bahamian families, Davis noted. He added that these tax reductions, along with targeted increases in revenues and enhanced enforcement, have improved the nation’s financial standing.
Davis emphasized that improved enforcement and collection have been the main method to generate increased revenues. He used the example of real property taxes, noting that about 70% of the hundreds of millions of dollars owed in real property taxes was owed by second homeowners, who often own a vacation home or winter home in The Bahamas.
“We function as their ‘home away from home’, when they want to escape to paradise,” Davis said. “Others use their second homes as income generators, renting out their properties to locals and visitors alike. Why is it that, for decades, we allowed many of these second homeowners to not pay their taxes? I don’t know if it makes sense to y’all, but it doesn’t make sense to me.”
There is a patent unfairness in enforcing tax policies on the poor and middle class but allowing the wealthy to pay when they feel like it, Davis stated. He resolved to make it clear that no one was above the law and everyone must pay their fair share.
In conclusion, the Prime Minister emphasized that the truth is, the average person doesn’t mind paying taxes as long as they feel empowered, the tax regime is fair, and there are clear results indicating where their tax dollars are going. People want to see improvements in areas like education and national security. They want to see new programmes that help people like the National School Breakfast Programme.
“We just want our money managed properly,” Davis said.
Frequently Asked Questions:
Q: Who is impacted by the Domestic Minimum Top-up Tax?
A: The Domestic Minimum Top-up Tax applies only to multinational corporations operating in The Bahamas that earn over 750 Million Euros per year or more, which is equivalent to $800 million per year or more.
Q: What is the projected revenue generated by the Bill?
A: The Bill is projected to generate revenues of up to $140 million to support “our transformative, people-focused agenda.”
Q: What were the tax reductions implemented by the government in the past three years?
A: The government lowered customs duties on a wide range of healthy and nutritious dietary staples, construction supplies, and a number of essential goods. The VAT rate was also lowered from 12% to 10% – a 20% reduction. Additionally, the threshold for paying real property taxes was increased from $250,000 to $300,000, benefiting many property owners.
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