Bahamian Government Introduces Domestic Minimum Top-Up Tax Bill, Targeting Multinational Corporations

• On Wednesday, October 16, 2024, the government of the Bahamas tabled the Domestic Minimum Top-Up Tax Bill 2024 in Parliament. The Bill seeks to introduce a 15% effective tax rate for in-scope multinational enterprises operating in The Bahamas with annual consolidated revenue at or above 750Mn Euros ($818Mn USD).
• Deputy Prime Minister Chester Cooper noted that at that threshold, very few Bahamian-owned and operated businesses would be impacted. Cooper noted that the bill is designed to align with the Organisation for Economic Cooperation and Development’s Global Anti-Base Erosion Rules. These rules are aimed at ensuring a global minimum level of income tax for large multinational enterprises.
• “In addition, with the passage of this bill, The Bahamas would be allowed to retain tax revenues on profits of these entities that would otherwise be subjected to top-up tax in another jurisdiction under the OECD’s Income Inclusion Rule (IIR) or the Under-Taxed Profit Rule. As a matter of policy, this administration has already stated that the lion’s share of the revenue from this bill would be dedicated to debt reduction and reducing the cost of living for ordinary Bahamians,” Cooper noted.
• He added that, in line with the options permitted by the EU Pillar Two directive, the draft DMTT (domestic minimum top-up tax) Bill provides for the introduction of a tax intended to be a “qualified domestic minimum top-up tax.”
• “This bill reflects comments received during the public consultation period, which was extended by two weeks and ended on September 30, 2024. During the debate, the government side would go through this bill in detail and provide an analysis of the policy considerations that went into it. The consultation paper foreshadowed the government’s intention to introduce some form of incentives to reduce the cost of doing business in The Bahamas. These incentives will be laid out in a companion piece of legislation,” said Cooper.
• “The government acknowledges the importance of developing this new regime, which would need to apply broadly across businesses in The Bahamas. Consequently, the view was taken that a separate bill be crafted to reflect the final position of the government and submitted for consideration during the mid-year budget exercise,” Cooper said.

(Source: Eyewitness News)