The Bahamas Issues a Policy Paper on a New CIT System, Including a QDMTT

Last week the Bahamian government released a Green Paper asking for feedback on four proposed strategies for the introduction of corporate income tax in the Bahamas. 

As the Prime Minister acknowledged, this is partly driven by the introduction of the GloBE rules by other Inclusive Framework members.
As an Inclusive Framework member, the Bahamas is not required to implement the GloBE rules, however, they are required to accept the application of the GloBE rules applied by other members, including (crucially) agreement on the rule order and the application of any agreed safe harbours.
This means Bahamian resident subsidiaries of both non-Bahamian resident multinational groups and Bahamian resident multinational groups with revenue of EUR750m or more will be liable to top-up tax elsewhere to increase their effective rate of tax to 15% from 2024 (in a number of jurisdictions).
Implementation of a Qualified Domestic Minimum Top-Up Tax (QDMTT) would allow the Bahamas to retain tax revenue that would otherwise flow to foreign jurisdictions.
Another factor in the potential transition to a corporate income tax regime is that the current Business Licence Fee is a tax on gross revenue not profits (which also raises particular problems for treaty relief and loss-making companies).
As such, the Business Licence Fee is unlikely to be treated as a covered tax under the OECD Pillar Two GloBE rules since, among other factors, it is not a profits-based tax. This then raises the prospect of Bahamian entities subject to the GloBE Rules facing double taxation (domestic tax under the Business Licence Fee regime with additional Pillar Two top-up tax in UPE/parent entity jurisdictions).
Following the Business Licence (Amendment) Act, 2022, the Business Licence Fee is currently levied at rates of up to 2.25%.
The Green Paper seeks feedback on four options:

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