‘Way too aggressive’ over Business Licence deadline

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Accountants yesterday warned that the March 31 deadline to complete 2025’s Business Licence audits and reviews is “way too aggressive” and will impose “significant strain” on many businesses.

Pretino P. Albury, the Bahamas Institute of Chartered Accountants (BICA) president, told Tribune Business that the Ministry of Finance’s target “is not feasible” based on the experience of auditors and clients alike following the first year under this new verification process.

However, he disclosed that Simon Wilson, the Ministry of Finance’s financial secretary, told BICA representatives in their last meeting on the issue around three weeks ago that he wants all Business Licence audits and reviews submitted within three months by end-March 2025 with minimal exceptions for certain business categories.

Mr Albury said it was agreed that companies required by law and regulation to produce their audited financial statements at end-April every year, such as the Central Bank’s bank and trust company licensees, will be given until that deadline to do likewise for Business Licence purposes.

And businesses that are pushed above the $5m annual turnover threshold, thereby triggering the Business Licence audit requirement, through enjoying a top-line revenue increase in 2024 will also not be held to March 31 given that they may be undergoing such rigorous procedures for the first time. However, Mr Albury said no revised deadline was given for this group.

The BICA president added that Mr Wilson signalled the Government would be open to granting extensions on a case-by-case basis provided this can be justified, but said the Bahamian accounting profession would prefer a glide path or “tiered approach” where they and their private sector clients gradually progress towards hitting the end-March Business Licence audit deadline.

Pointing out that some firms had this year obtained extensions until October and November to complete the process, Mr Albury argued that the leap to March 31 will likely prove too great for many while the accounting profession lacks the necessary “capacity” to cope.

Revealing that BICA is talking to both the Prime Minister and Michael Halkitis, minister of economic affairs, on the issue although he declined to provide details, he pledged that the Association will “continue with the pressure and negotiations to extend the deadline” with just a few weeks left to achieve any movement by the Government.

Speaking ahead of today’s BICA taxation seminar, which will include a focus on Business Licence reviews and audits, Mr Albury told this newspaper: “We should be discussing some of the concerns from the industry. One of the main concerns, which is going to continue to be an issue, is the deadline for all audits to be completed by.”

The Ministry of Finance and Department of Inland Revenue set an initial end-April deadline for 2024’s Business Licence audits and reviews, which are meant to verify that a company’s filings and tax payments are accurate, with a possible two-month extension to end-June “at the very latest” if justified. However, numerous firms ultimately sought – and obtained – extensions to October and even last month.

However, with a year’s experience now behind the auditors and private sector, the Ministry of Finance wants to revert to an end-March deadline. “Our last meeting with the financial secretary, he said you guys had had your one year, so we’re going back to March 31,” Mr Albury disclosed.

“Based on just our first year, and we’re telling you these are some of the issues. The capacity issues, there’s still client concerns. Can we continue to have this extension until at least June? Let’s keep it at June. That’s it. All we’re asking for is a bit more time on the audits to June.

“What he [Mr Wilson] did say is that businesses which have a regulatory deadline of April, I’ll let you deal with that, and if you need a further extension come into us, but it’s March 31. It’s a significant pressure, and he also wants the [Business Licence] reviews just below the $5m mark on that March 31. He wants all that done.”

Only companies with annual turnover exceeding $5m have to submit full audited financial statements for Business Licence purposes, but their smaller counterparts do not escape scrutiny either. Those generating more than $250,000 per annum in top-line revenue need their financials certified by an independent accountant to verify that their filings and payments are accurate.

Mr Albury said companies will still pay the required Business Licence fees by end-March, and extra time is only required on the audit and review submissions. Any under-payment can easily be corrected when the audit is submitted, and the BICA president there was unlikely to be “a significant variance” between the two.

With the first year’s outcome having shown March 31 “is not feasible, he added: “Even up to November, last month, there were folks still not done. It’s telling you: Let’s extend the deadline a bit. We’re not saying we don’t want to get to March at some point, but build towards it. You’ve got to get there.

“In the second year, June, and maybe in the third year, May. We have to work our way there, a tiered approach to it and a reasonable approach.” Mr Albury said BICA had obtained a concession for companies “no longer in the review block but which have moved to the audit block” because their 2024 turnover exceeded the $5m threshold.

“Those people will have their first audit in 2025,” he added. “At least those have been extended. He [Mr Wilson] did say they’ll do that and provide for that. They did not give us a date, but we did get an extension. That was the compromise; the companies that are going to come into it for the first time.”

Asked about the impact sticking to March 31 will have on both accountants and companies, Mr Albury told Tribune Business: “It’s going to be significant; very significant. To have to do that, be able to do that, it’s going to be a significant strain on firms; not just the firms, but the businesses.

“We’ll get there eventually, but I think it’s just too soon. That’s why we recommended a tiered approach because I think March is way too aggressive. We do believe our conversations with the Prime Minister and Mr Halkitis may help alleviate, but I don’t want to touch on that.

“That’s the official position from this side. That’s where we are but negotiations continue. That’s [the meeting with Mr Wilson] just the first round. That was three weeks ago. We’ve got to get some decisions made before the end of the year we hope. We’re still going to continue with the pressure and the negotiation to extend the deadline. It’s not going to stop.”

Mr Wilson, in a previous interview with Tribune Business signalled that the Business Licence audit requirement was a precursor to the introduction of corporate income tax in The Bahamas although this is unlikely to happen before the next general election which must be held by September 2026.

He also voiced scepticism over the accounting profession’s concerns that it lacked the manpower to do what the Government was asking in the timeframe given, arguing that those businesses requiring an audit numbered only around 141 or less than 1 percent of the 50,000-plus Business Licence applications submitted annually.

Business Licence fees are one area targeted for increased revenues by the Government. They are projected to increase by more than $62.5m, or 44.4 percent, to $203.554m during the current 2024-2025 fiscal year compared to the prior one, before rising again to $237.828m and $240.182m in 2025-2026 and 2026-2027, respectively.

Meanwhile, some 81.7 percent of the 2023-2024 fiscal year’s target was collected by end-March this year. Data unveiled with the 2024-2025 Budget showed that some $115.307m in Business Licence fee revenues had been collected at that point compared to the full-year target of $141m.