Business License Tax Filing | KPMG | BS

Business License Tax Filing - Are you ready for 2017?

Business License Tax Filing

The 2017 Business Licence season is quickly approaching and it’s not too soon for businesses to start preparing for their annual reporting to the Department of Inland Revenue

1000

Director, Tax Services

KPMG In Bahamas

Contact

Related content

Tax

In 2015, a number of amendments were made to the Business Licence Act (“BLA”) that resulted in a reduction in the rates of tax certain businesses paid. However, at the same time, the Government introduced certain administrative changes including:

  • New $100,000 threshold for mandatory certification by an independent accountant;
  • New penalties;
  • Mandatory calendar year reporting requirements.

Although this will be the second year under the new requirements, some confusion existed with the deadlines and reporting requirements in 2016 and the Ministry of Finance (“MOF”) provided some relief measures in this regard. These measures are no longer in place so it is important for businesses to be fully prepared.

Certification requirements

For businesses with turnover of $100,000 per annum or more, submitted financial results must be accompanied by a statement as to the turnover (i.e. sales) of the business, certified by a person who is qualified in accounting and who has no interest in the business to which the certificate relates. As a matter of policy, certifications are only accepted from accountants who are licenced by the Bahamas Institute of Chartered Accountants (“BICA”).

We note that the business community has made recommendations that the $100,000 threshold be raised to $400,000. However, such amendments have not occurred and the $100,000 threshold remains fo rthe 2017 filing year.

Documentation checklist

Your accountant should provide you with a list of documents they will require to carry out the certification of your turnover. However, in preparation for your filing you should at minimum plan to have the following information and documents complete and available for your accountant:

  • Financial statements
  • Bank statements
  • Bank reconciliations
  • Detailed sales ledger
  • Accounts receivable ledger
  • VAT returns

Since all businesses must follow the new mandatory calendar year reporting requirements, all documents and information should include the 2016 calendar year.

Deadlines

The annual Business Licence covers the year ending December 31, 2017 and the application must be filed with the MOF by January 31, 2017. Payment must be made no later than March 31, 2017.

The Business Licence renewal is made online through the Online Tax Administration System (“OTAS”). This is the same system used for Value Added Tax (“VAT”)return filing so be sure that your payment is made in respect of the Business Licence and not VAT to avoid potential penalty errors.

If you have an outstanding refund or credit with the VAT department, you can make a request to the MOF to apply the amount of refund claimed as a reduction of any unpaid Business Licence Tax. This adjustment is not automatic and we suggest that such application be made well in advance of the March 31 payment deadline to take advantage of this option.

No extension of 2016 MOF concessions

In 2016 the Bahamas Chamber of Commerce and Employer’s Confederation met with officials of the MOF due to concerns over the new timelines for certification. In response, the MOF agreed at that time to extend the filing deadline to March 31 instead of January 31. However, this concession only applied to2016.

We have confirmed with the MOF that last year’s accommodations are not being extended, we assume as businesses have now had plenty of time to prepare.Therefore, it is important that businesses put in place procedures to have their financial information ready early in January to allow sufficient time for their accountant to carry out the appropriate review procedures necessary to issue the certification.

Penalties

Failure to file the application on or before January 31,2017 will result in a late application penalty of $100 and failure to pay the Business Licence Tax by the March 31 deadline will result in a late payment penalty of 10% of the taxes owing. Persons operating without a valid Business Licence are subject to a fine of $5,000.

Note that although the 2016 Business Licences expire on December 31, 2016, the legislation allows for a licence to be treated as valid until March 31, 2017. Therefore, if you are late filing your Business Licence renewal but it is filed and paid by March 31, 2017 the business will only be subject to a penalty of $100.

© 2017 KPMG Advisory Services Ltd., a Bahamian limited company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The information contained herein is of general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Connect with us

 

Request for proposal

 

Submit