82772 Economy Profile: Bahamas, The Doing Business 2014 Bahamas, The 2 © 2013 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org All rights reserved. 1 2 3 4 15 14 13 12 A copublication of The World Bank and the International Finance Corporation. This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://creativecommons.org/licenses/by/3.0. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2013. Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises. Washington, DC: World Bank Group. DOI: 10.1596/978-0-8213-9615-5. License: Creative Commons Attribution CC BY 3.0 Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Additional copies of all 11 editions of Doing Business may be purchased at www.doingbusiness.org. Cover design: The Word Express Doing Business 2014 Bahamas, The 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 5 Starting a business ..................................................................................................................... 14 Dealing with construction permits ........................................................................................... 23 Getting electricity ....................................................................................................................... 32 Registering property .................................................................................................................. 39 Getting credit .............................................................................................................................. 48 Protecting investors ................................................................................................................... 55 Paying taxes ................................................................................................................................ 64 Trading across borders .............................................................................................................. 71 Enforcing contracts .................................................................................................................... 79 Resolving insolvency .................................................................................................................. 89 Employing workers .................................................................................................................... 94 Data notes ................................................................................................................................. 101 Resources on the Doing Business website ............................................................................ 107 Doing Business 2014 Bahamas, The 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is (except for the paying taxes indicators, which cover the for a local entrepreneur to open and run a small to period January–December 2012). medium-size business when complying with relevant The Doing Business methodology has limitations. Other regulations. It measures and tracks changes in areas important to business—such as an economy’s regulations affecting 11 areas in the life cycle of a proximity to large markets, the quality of its business: starting a business, dealing with construction infrastructure services (other than those related to permits, getting electricity, registering property, trading across borders and getting electricity), the getting credit, protecting investors, paying taxes, security of property from theft and looting, the trading across borders, enforcing contracts, resolving transparency of government procurement, insolvency and employing workers. macroeconomic conditions or the underlying strength In a series of annual reports Doing Business presents of institutions—are not directly studied by Doing quantitative indicators on business regulations and the Business. The indicators refer to a specific type of protection of property rights that can be compared business, generally a local limited liability company across 189 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Because over time. The data set covers 47 economies in Sub- standard assumptions are used in the data collection, Saharan Africa, 33 in Latin America and the Caribbean, comparisons and benchmarks are valid across 25 in East Asia and the Pacific, 25 in Eastern Europe economies. The data not only highlight the extent of and Central Asia, 20 in the Middle East and North obstacles to doing business; they also help identify the Africa and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers in income economies. The indicators are used to analyze designing regulatory reform. economic outcomes and identify what reforms have More information is available in the full report. Doing worked, where and why. Business 2014 presents the indicators, analyzes their This economy profile presents the Doing Business relationship with economic outcomes and presents indicators for Bahamas, The. To allow useful business regulatory reforms. The data, along with comparison, it also provides data for other selected information on ordering Doing Business 2014, are economies (comparator economies) for each indicator. available on the Doing Business website at The data in this report are current as of June 1, 2013 http://www.doingbusiness.org. Doing Business 2014 Bahamas, The 5 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to ECONOMY OVERVIEW start is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing Region: Latin America & Caribbean business based on indicator sets that measure and benchmark regulations applying to domestic small to Income category: High income medium-size businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of Population: 371,960 doing business index. For each economy the index is calculated as the ranking on the simple average of its GNI per capita (US$): 22,833 percentile rankings on each of the 10 topics included in the index in Doing Business 2014: starting a business, DB2014 rank: 84 dealing with construction permits, getting electricity, registering property, getting credit, protecting DB2013 rank: 76* investors, paying taxes, trading across borders, Change in rank: -8 enforcing contracts and resolving insolvency. The ranking on each topic is the simple average of the DB 2014 DTF: 65.46 percentile rankings on its component indicators (see the data notes for more details). The employing workers DB 2013 DTF: 65.13 indicators are not included in this year’s aggregate ea se of doing business ranking, but the data are presented Change in DTF: 0.36 in this year’s economy profile. The aggregate ranking on the ease of doing business * DB2013 ranking shown is not last year’s published benchmarks each economy’s performance on the ranking but a comparable ranking for DB2013 that indicators against that of all other economies in the captures the effects of such factors as data Doing Business sample (figure 1.1). While this ranking corrections and the addition of 4 economies (Libya, tells much about the business environment in an Myanmar, San Marino and South Sudan) to the economy, it does not tell the whole story. The ranking on sample this year. See the data notes for sources and the ease of doing business, and the underlying definitions. indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business. Doing Business 2014 Bahamas, The 6 THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Doing Business 2014 Bahamas, The 7 THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy relative to the regional average (figure 1.2). The stands in the aggregate ranking on the ease of economy’s rankings on the topics included in the doing business is useful. Also useful is to know how ease of doing business index provide another it ranks relative to comparator economies and perspective (figure 1.3). Figure 1.2 How Bahamas, The and comparator economies rank on the ease of doing business Source: Doing Business database. Doing Business 2014 Bahamas, The 8 THE BUSINESS ENVIRONMENT Figure 1.3 How Bahamas, The ranks on Doing Business topics Source: Doing Business database. Doing Business 2014 Bahamas, The 9 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business Doing Business introduced the distance to frontier tells only part of the story, so do changes in that ranking. measure. This measure shows how far on average an Yearly movements in rankings can provide some indication economy is from the best performance achieved by any of changes in an economy’s regulatory environment for economy on each Doing Business indicator since 2005, firms, but they are always relative. except for the getting electricity indicators, which were introduced in 2009. Moreover, year-to-year changes in the overall rankings do not reflect how the business regulatory environment in an Comparing the measure for an economy at 2 points in economy has changed over time—or how it has changed time allows users to assess how much the economy’s in different areas. To aid in assessing such changes, regulatory environment as measured by Doing Business has changed over time—how far it has moved toward (or away from) the most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.4). Figure 1.4 How far has Bahamas, The come in the areas measured by Doing Business? Note: The distance to frontier measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2005, except for the getting electricity indicators, which were introduced in 2009. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). The overall distance to frontier is the average of the distance to frontier in the first 9 indicator sets shown in the figure and does not include getting electricity. Data on the overall distance to frontier including getting electricity is available at http://www.doingbusiness.org/data/distance-to-frontier. See the data notes for more details on the distance to frontier measure. Source: Doing Business database. Doing Business 2014 Bahamas, The 10 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part business regulation—such as a regulatory process that of the story (table 1.1). The indicators, on their own or can be completed with a small number of procedures in comparison with the indicators of a good practice in a few days and at a low cost. Comparison of the economy or those of comparator economies in the economy’s indicators today with those in the previous region, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist — numbers of procedures, long delays or high costs. Or and where they are diminishing. they may reveal unexpected strengths in an area of Table 1.1 Summary of Doing Business indicators for Bahamas, The United Kingdom DB2014 Best performer globally Bahamas, The DB2014 Bahamas, The DB2013 United States DB2014 Antigua and Barbuda Barbados DB2014 St. Lucia DB2014 Jamaica DB2014 Indicator DB2014 DB2014 Starting a Business 83 78 92 77 23 57 28 20 New Zealand (1) (rank) Procedures (number) 7 7 8 8 5 5 6 6 New Zealand (1)* Time (days) 23.5 23.5 21.0 18.0 6.0 15.0 12.0 5.0 New Zealand (0.5) Cost (% of income per 10.4 10.3 10.5 7.2 6.4 18.6 0.3 1.5 Slovenia (0.0) capita) Paid-in Min. Capital (% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 112 Economies (0.0)* of income per capita) Dealing with Hong Kong SAR, Construction Permits 75 66 21 56 52 11 27 34 China (1) (rank) Hong Kong SAR, Procedures (number) 14 14 10 10 8 7 12 16 China (6) Time (days) 178.0 178.0 134.0 442.0 135.0 110.0 88.0 91.0 Singapore (26.0) Doing Business 2014 Bahamas, The 11 United Kingdom DB2014 Best performer globally Bahamas, The DB2014 Bahamas, The DB2013 United States DB2014 Antigua and Barbuda Barbados DB2014 St. Lucia DB2014 Jamaica DB2014 Indicator DB2014 DB2014 Cost (% of income per 28.2 27.8 22.5 8.3 207.1 37.7 66.0 16.7 Qatar (1.1) capita) Getting Electricity 45 43 20 83 132 31 74 13 Iceland (1) (rank) Procedures (number) 5 5 4 7 6 5 5 4 10 Economies (3)* Time (days) 67 67 42 65 96 26 126 60 Germany (17) Cost (% of income per 102.2 103.1 126.2 60.9 540.6 211.9 91.9 15.6 Japan (0.0) capita) Registering Property 182 182 128 142 114 129 68 25 Georgia (1) (rank) Procedures (number) 7 7 7 6 6 9 6 4 4 Economies (1)* Time (days) 122.0 122.0 26.0 153.0 36.0 17.0 21.5 12.0 New Zealand (1.0)* Cost (% of property 12.1 14.1 10.8 5.6 9.5 7.5 4.7 3.4 5 Economies (0.0)* value) Getting Credit (rank) 86 82 130 86 109 130 1 3 Malaysia (1)* Strength of legal rights 9 9 7 9 8 7 10 9 10 Economies (10)* index (0-10) Depth of credit 0 0 0 0 0 0 6 6 31 Economies (6)* information index (0-6) Public registry coverage 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Portugal (100.0)* (% of adults) Private bureau 0.0 0.0 0.0 0.0 0.0 0.0 100.0 100.0 22 Economies (100.0)* coverage (% of adults) Protecting Investors 115 113 34 170 80 34 10 6 New Zealand (1) (rank) Extent of disclosure 2 2 4 2 4 4 10 7 10 Economies (10)* Doing Business 2014 Bahamas, The 12 United Kingdom DB2014 Best performer globally Bahamas, The DB2014 Bahamas, The DB2013 United States DB2014 Antigua and Barbuda Barbados DB2014 St. Lucia DB2014 Jamaica DB2014 Indicator DB2014 DB2014 index (0-10) Extent of director 5 5 8 1 8 8 7 9 Cambodia (10) liability index (0-10) Ease of shareholder 7 7 7 6 4 7 7 9 3 Economies (10)* suits index (0-10) Strength of investor 4.7 4.7 6.3 3.0 5.3 6.3 8.0 8.3 New Zealand (9.7) protection index (0-10) United Arab Emirates Paying Taxes (rank) 45 50 151 112 168 45 14 64 (1) Payments (number per Hong Kong SAR, 18 18 57 28 36 32 8 11 year) China (3)* United Arab Emirates Time (hours per year) 58 58 207 237 368 97 110 175 (12) Trading Across Borders 72 67 93 30 118 104 16 22 Singapore (1) (rank) Documents to export 5 5 5 5 6 7 4 3 Ireland (2)* (number) Time to export (days) 19 19 16 9 20 14 8 6 5 Economies (6)* Cost to export (US$ per 1,005 1,005 1,090 810 1,530 935 1,005 1,090 Malaysia (450) container) Documents to import 5 5 7 5 7 8 4 5 Ireland (2)* (number) Time to import (days) 13 13 23 8 17 13 6 5 Singapore (4) Cost to import (US$ per 1,770 1,495 1,520 1,615 2,130 2,260 1,050 1,315 Singapore (440) container) Enforcing Contracts 125 123 65 110 131 170 56 11 Luxembourg (1) (rank) Doing Business 2014 Bahamas, The 13 United Kingdom DB2014 Best performer globally Bahamas, The DB2014 Bahamas, The DB2013 United States DB2014 Antigua and Barbuda Barbados DB2014 St. Lucia DB2014 Jamaica DB2014 Indicator DB2014 DB2014 Time (days) 427 427 351 1,340 655 635 437 370 Singapore (150) Cost (% of claim) 28.9 28.9 22.7 19.7 45.6 37.3 39.9 18.4 Bhutan (0.1) Procedures (number) 49 49 44 38 35 46 28 32 Singapore (21)* Resolving Insolvency 32 32 80 28 31 56 7 17 Japan (1) (rank) Time (years) 3.0 3.0 3.0 1.8 1.1 2.0 1.0 1.5 Ireland (0.4) Cost (% of estate) 12 12 7 15 18 9 6 7 Norway (1) Outcome (0 as piecemeal sale and 1 as 1 1 0 1 1 0 1 1 going concern) Recovery rate (cents on 63.5 62.9 35.9 65.1 64.2 42.5 88.6 81.5 Japan (92.8) the dollar) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. For more information on “no practice” marks, see the data notes. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. Doing Business 2014 Bahamas, The 14 STARTING A BUSINESS Formal registration of companies has many WHAT THE STARTING A BUSINESS immediate benefits for the companies and for business owners and employees. Legal entities can INDICATORS MEASURE outlive their founders. Resources are pooled as several shareholders join forces to start a company. Procedures to legally start and operate a Formally registered companies have access to company (number) services and institutions from courts to banks as Preregistration (for example, name well as to new markets. And their employees can verification or reservation, notarization) benefit from protections provided by the law. An additional benefit comes with limited liability Registration in the economy’s largest companies. These limit the financial liability of business city company owners to their investments, so personal Postregistration (for example, social security assets of the owners are not put at risk. Where registration, company seal) governments make registration easy, more entrepreneurs start businesses in the formal sector, Time required to complete each procedure creating more good jobs and generating more (calendar days) revenue for the government. Does not include time spent gathering What do the indicators cover? information Doing Business measures the ease of starting a Each procedure starts on a separate day (2 business in an economy by recording all procedures cannot start on the same day). procedures officially required or commonly done in Procedures that can be fully completed practice by an entrepreneur to start up and online are an exception to this rule. formally operate an industrial or commercial Procedure completed once final document is business—as well as the time and cost required to received complete these procedures. It also records the paid-in minimum capital that companies must No prior contact with officials deposit before registration (or within 3 months). Cost required to complete each procedure The ranking on the ease of starting a business is (% of income per capita) the simple average of the percentile rankings on the 4 component indicators: procedures, time, cost Official costs only, no bribes and paid-in minimum capital requirement. No professional fees unless services required To make the data comparable across economies, by law Doing Business uses several assumptions about the Paid-in minimum capital (% of income business and the procedures. It assumes that all per capita) information is readily available to the entrepreneur and that there has been no prior contact with Deposited in a bank or with a notary before officials. It also assumes that the entrepreneur will registration (or within 3 months) pay no bribes. And it assumes that the business:  Has a start-up capital of 10 times income per  Is a limited liability company, located in the capita. largest business city and is 100% domestically  Has a turnover of at least 100 times income per owned. capita.  Has between 10 and 50 employees.  Does not qualify for any special benefits.  Conducts general commercial or industrial  Does not own real estate. activities. Doing Business 2014 Bahamas, The 15 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Bahamas, The? days, costs 10.4% of income per capita and requires According to data collected by Doing Business, starting paid-in minimum capital of 0.0% of income per capita a business there requires 7 procedures, takes 23.5 (figure 2.1). Figure 2.1 What it takes to start a business in Bahamas, The Paid-in minimum capital (% of income per capita): 0.0 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Bahamas, The 16 STARTING A BUSINESS Globally, Bahamas, The stands at 83 in the ranking of and the regional average ranking provide other useful 189 economies on the ease of starting a business information for assessing how easy it is for an (figure 2.2). The rankings for comparator economies entrepreneur in Bahamas, The to start a business. Figure 2.2 How Bahamas, The and comparator economies rank on the ease of starting a business Source: Doing Business database. Doing Business 2014 Bahamas, The 17 STARTING A BUSINESS What are the changes over time? The benchmarks provided by the economies that over 2.3) can help show what is possible in making it easier time have had the best performance regionally or to start a business. And changes in regional averages globally on the procedures, time, cost or paid-in can show where Bahamas, The is keeping up—and minimum capital required to start a business (figure where it is falling behind. Figure 2.3 Has starting a business become easier over time? Procedures (number) Time (days) Doing Business 2014 Bahamas, The 18 STARTING A BUSINESS Cost (% of income per capita) Paid-in minimum capital (% of income per capita) Note: Ninety economies globally have no paid-in minimum capital requirement. DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Bahamas, The 19 STARTING A BUSINESS Economies around the world have taken steps making greater firm satisfaction and savings and more it easier to start a business—streamlining procedures registered businesses, financial resources and job by setting up a one-stop shop, making procedures opportunities. simpler or faster by introducing technology and What business registration reforms has Doing Business reducing or eliminating minimum capital requirements. recorded in Bahamas, The (table 2.1)? Many have undertaken business registration reforms in stages—and they often are part of a larger regulatory reform program. Among the benefits have been Table 2.1 How has Bahamas, The made starting a business easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 20 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for STANDARDIZED COMPANY Bahamas, The is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new City: Nassau firm. These are identified by Doing Business through collaboration with relevant local Legal Form: Limited Liability Company (LLC) professionals and the study of laws, regulations and Paid in Minimum Capital Requirement: None publicly available information on business entry in that economy. Following is a detailed summary of Start-up Capital: 10 times GNI per capita those procedures, along with the associated time and cost. These procedures are those that apply to a company matching the standard assumptions (the “standardized company”) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). Summary of procedures for starting a business in Bahamas, The—and the time and cost Time to No. Procedure Cost to complete complete Search for a Company name and reserve the proposed name online The online name search system has been in place since 2004 and it is estimated that less than 50% of all applicants use it while the rest still Less than one day no charge (included 1 request the search in person. Since the majority of people cannot (online procedure) in procedure 2) search it, it is mainly done by lawyers and service providers who include the name fees in their fees. The name reservation expires after 90 days. Procedure can be done online A lawyer prepares and notarizes the company documents (memorandum and articles of association). Legally, only the memorandum has to be filed at the moment of the incorporation. Standard Articles of Association are available and the memorandum has to be a statutory declaration. Therefore, the most common scenario is to prepare both. Since 2001, the Bahamas has issued many provisions on anti-money laundering and since then the information requested from the client has increased. Usually, a client Usually about has to provide the law firm with a financial and a character reference as B$610 = B$100 to 2 well as a copy of his or her passport. Affidavit must be executed by 1-2 days public treasury witness to subscribers to Memorandum and Articles of Association and +B$510 register of a Statutory Declaration must be executed by Notary Public that has company notarized the affidavit before another Notary Public. Lawyer should be a notary (at the same time). The memorandum and articles of association can also be prepared by a licensee under the Financial and Corporate Services Providers Act. However, notarization of the Statutory Declaration is still required. Doing Business 2014 Bahamas, The 21 Time to No. Procedure Cost to complete complete The memorandum and articles of association can also be prepared by a licensee under the Financial and Corporate Services Providers Act. However, notarization of the Statutory Declaration is still required. USD 100 stamp Stamp duty on the Memorandum paid to the Public Treasury duty is payable on the first USD 5,000 The fees includes $100 stamp duty is payable on the first $5,000 authorized capital 3 authorized capital of the company and $5 for every additional $1,000 1 day of the company authorized capital. and USD 5 for every additional USD 1,000 authorized capital File the company documents at the Companies Registry USD 300 for the The registration is usually done by the lawyer. The company is Memorandum + incorporated on the date that the incorporation documents are USD 30 for the submitted to the Companies Registry. A registration fee of $330 is paid Articles of 4 at the Registrar General’s office ($300 for the Memorandum and $30 for 10 days Association + USD the Articles of Association). Once the final incorporation certificate is 4 (per page) for a ready, an additional fee of $4 per page is charged to obtain a certified copy of the copy of the Memorandum & Articles of Association. Memorandum and the Articles. Obtain the National Insurance Number for the Company from the National Insurance Board The National Insurance Number is a requirement to obtain business license. According to the National Insurance Act, every employer has to have a national insurance employer’s number. This could be obtained at no cost and it can be done in a day (by mail or in person). The 5 document required for registration is a certificate of incorporation. 1 day no charge Employer also registers the employees if they have not been registered already. Where an employee is being registered with the National Insurance Board they must provide a copy of a document that verifies their birth, i.e. a birth certificate, passport or affidavit. Register the company for a business license at the Valuation/Business License Department of the Ministry of Finance. Under the Business License Act all persons carrying on business in The Bahamas must have a business license before operations commence, 6 whether or not the business is owned by Bahamians. Since the coming 10 days USD 100 (flat fee) into force of the Business License Act, 2010 there is no longer a requirement to separately register the trading name of the company. The requested trading name is indicated on the Business Registration Form. When the Business Registration Form is submitted it must be accompanied by: (i) proof of citizenship of the beneficial owners of the Doing Business 2014 Bahamas, The 22 Time to No. Procedure Cost to complete complete company; (ii) a copy of the Certificate of Incorporation of the company; (iii) a copy of the Certificate of Registration from the National Insurance Board; (iv) a copy of the lease for the property; (v) a copy of the Certificate of Sanitation from the Department of Environmental Health Services; and (vi) the licensing fee of $100. * Company Seal A proof of seal has to be provided at the time of filing the first annual 2-3 days statement. Under section 26 of the Companies Act, 1992 every (simultaneous with 7 company must have a common seal. Seals are locally manufactured USD 35 previous and can usually be obtained within 2-3 business days at a cost of $30- procedure) $35 * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2014 Bahamas, The 23 DEALING WITH CONSTRUCTION PERMITS Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION public. But it needs to be efficient, to avoid PERMITS INDICATORS MEASURE excessive constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in Procedures to legally build a warehouse time and money, many builders opt out. They may (number) pay bribes to pass inspections or simply build Submitting all relevant documents and illegally, leading to hazardous construction that obtaining all necessary clearances, licenses, puts public safety at risk. Where compliance is permits and certificates simple, straightforward and inexpensive, everyone Submitting all required notifications and is better off. receiving all necessary inspections What do the indicators cover? Obtaining utility connections for water, Doing Business records the procedures, time and sewerage and a land telephone line cost for a business in the construction industry to Registering the warehouse after its obtain all the necessary approvals to build a completion (if required for use as collateral or warehouse in the economy’s largest business city, for transfer of the warehouse) connect it to basic utilities and register the Time required to complete each procedure property so that it can be used as collateral or (calendar days) transferred to another entity. Does not include time spent gathering The ranking on the ease of dealing with information construction permits is the simple average of the Each procedure starts on a separate day. percentile rankings on its component indicators: Procedures that can be fully completed online procedures, time and cost. are an exception to this rule. To make the data comparable across economies, Procedure considered completed once final Doing Business uses several assumptions about the document is received business and the warehouse, including the utility connections. No prior contact with officials The business: Cost required to complete each procedure (% of income per capita)  Is a limited liability company operating in Official costs only, no bribes the construction business and located in the largest business city.  Will be connected to water, sewerage (sewage system, septic tank or their  Is domestically owned and operated. equivalent) and a fixed telephone line. The  Has 60 builders and other employees. connection to each utility network will be 10 The warehouse: meters (32 feet, 10 inches) long.  Is a new construction (there was no  Will be used for general storage, such as of previous construction on the land). books or stationery (not for goods requiring special conditions).  Has complete architectural and technical plans prepared by a licensed architect or  Will take 30 weeks to construct (excluding all engineer. delays due to administrative and regulatory requirements). Doing Business 2014 Bahamas, The 24 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to permits there requires 14 procedures, takes 178.0 days build a warehouse in Bahamas, The? According to data and costs 28.2% of income per capita (figure 3.1). collected by Doing Business, dealing with construction Figure 3.1 What it takes to comply with formalities to build a warehouse in Bahamas, The Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Bahamas, The 25 DEALING WITH CONSTRUCTION PERMITS Globally, Bahamas, The stands at 75 in the ranking of ranking provide other useful information for assessing 189 economies on the ease of dealing with how easy it is for an entrepreneur in Bahamas, The to construction permits (figure 3.2). The rankings for legally build a warehouse. comparator economies and the regional average Figure 3.2 How Bahamas, The and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2014 Bahamas, The 26 DEALING WITH CONSTRUCTION PERMITS What are the changes over time? The benchmarks provided by the economies that over what is possible in making it easier to deal with time have had the best performance regionally or construction permits. And changes in regional globally on the procedures, time or cost required to averages can show where Bahamas, The is keeping deal with construction permits (figure 3.3) help show up—and where it is falling behind. Figure 3.3 Has dealing with construction permits become easier over time? Procedures (number) Time (days) Doing Business 2014 Bahamas, The 27 DEALING WITH CONSTRUCTION PERMITS Cost (% of income per capita) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. For more information on “no practice” marks, see the data notes. Source: Doing Business database. Doing Business 2014 Bahamas, The 28 DEALING WITH CONSTRUCTION PERMITS Smart regulation ensures that standards are met while building safety while keeping compliance costs making compliance easy and accessible to all. reasonable, governments around the world have Coherent and transparent rules, efficient processes and worked on consolidating permitting requirements. adequate allocation of resources are especially What construction permitting reforms has Doing important in sectors where safety is at stake. Business recorded in Bahamas, The (table 3.1)? Construction is one of them. In an effort to ensure Table 3.1 How has Bahamas, The made dealing with construction permits easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 29 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for Bahamas, The are BUILDING A WAREHOUSE based on a set of specific procedures—the steps that a company must complete to legally build a warehouse—identified by Doing Business through City : Nassau information collected from experts in construction licensing, including architects, civil engineers, Estimated construction lawyers, construction firms, utility BSD 1,120,000 Warehouse Value : service providers and public officials who deal with building regulations. These procedures are those The procedures, along with the associated time and that apply to a company and structure matching cost, are summarized below. the standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Summary of procedures for dealing with construction permits in Bahamas, The —and the time and cost Time to No. Procedure Cost to complete complete Request and obtain “approval in principle” (planning permission) with the Town Planning Committee This approval is not a pre-requisite for the building permit but most constructors would still want to obtain it in advance to make sure that their project is viable/acceptable in terms of town planning. Only the following documents have to be attached: plot and location plan, not 1 proof of ownership needed at this point. The Committee that examines 30 days no charge the proposal meets only every other week. The Committee members represent the different interest groups that are interested in building process. The Committee agenda is prepared by the Department of Physical Planning; The Committee also hears complaints and addresses grievances. Request and obtain building permit at the Building Control Unit of the Ministry of Works The cost of the permit is a function of the surface of the construction (over 10,000 sq. ft. = BSD 25.00 per 100 sq. ft., thus 25 * 140 = BSD 3,500.00). 10% of the total fee is paid upon application for the permit as a deposit and the remaining 90% is paid upon the receipt of the permit. The permit also has to go again to the Town Planning Department to 120 days BSD 3,500 2 approve the zoning. The Development Control Unit estimates 90 to 120 days. Buildings Regulation Art. 4. (1) “Subject to the provisions of this Act, no person shall commence or carry on, or cause or procure to be commenced or carried on, any building operation save under and in accordance with the conditions of a valid building permit and in accordance with the provisions of this Act and any rules and the Building Code”. The status of the application can be checked online (http://65.198.211.69/mopwuserlogin/PreguntaPage.htm) Doing Business 2014 Bahamas, The 30 Time to No. Procedure Cost to complete complete Request plumbing certificate Licensed plumber hired by BuildCo submits Plumbing Specification 1 day no charge 3 forms to the Ministry of Works and requests an inspection in person. Receive inspection for plumbing certificate 4 1 day no charge Obtain plumbing certificate After the plumbing has been approved, the plumber can obtain a copy 1 day no charge 5 of the approval at the Ministry of Works. Receive inspection - floor 6 1 day no charge Receive inspection - walls 7 1 day no charge Receive inspection - roof 8 1 day no charge Receive final inspection 9 1 day no charge Obtain occupancy permit 10 2 days no charge Request water and sewage 11 1 day no charge Doing Business 2014 Bahamas, The 31 Time to No. Procedure Cost to complete complete * Receive water and sewage inspection 12 1 day no charge * Obtain water and sewage service Bahamas Water and Sewerage Corporation will conduct the works to connect the meter to the main. BuildCo must hire a licensed plumber to 16 days BSD 2,784 13 connect from the meter to the building. Cost includes labor, connection fee and meter. * Obtain telephone service 14 16 days BSD 150 * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2014 Bahamas, The 32 GETTING ELECTRICITY Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY for businesses. To counter weak electricity supply, many firms in developing economies have to rely INDICATORS MEASURE on self-supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the Procedures to obtain an electricity first step for a customer is always to gain access by connection (number) obtaining a connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for Completing all required notifications and a local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized warehouse, as well as the time and cost to Obtaining external installation works and complete them. These procedures include possibly purchasing material for these works applications and contracts with electricity utilities, Concluding any necessary supply contract and clearances from other agencies and the external obtaining final supply and final connection works. The ranking on the ease of getting electricity is the simple average of Time required to complete each procedure the percentile rankings on its component (calendar days) indicators: procedures, time and cost. To make the Is at least 1 calendar day data comparable across economies, several assumptions are used. Each procedure starts on a separate day The warehouse: Does not include time spent gathering information  Is located in the economy’s largest business city, in an area where other Reflects the time spent in practice, with little warehouses are located. follow-up and no prior contact with officials  Is not in a special economic zone where Cost required to complete each procedure the connection would be eligible for (% of income per capita) subsidization or faster service. Official costs only, no bribes  Has road access. The connection works Excludes value added tax involve the crossing of a road or roads but are carried out on public land.  Is to either the low-voltage or the medium-  Is a new construction being connected to voltage distribution network and either overhead electricity for the first time. or underground, whichever is more common in the economy and area where the warehouse is  Has 2 stories, both above ground, with a located. The length of any connection in the total surface of about 1,300.6 square customer’s private domain is negligible. meters (14,000 square feet), and is built on a plot of 929 square meters (10,000 square  Requires crossing of a 10-meter road but all the feet). works are carried out in a public land, so there is no crossing into other people's private property. The electricity connection:  Involves installing one electricity meter. The  Is 150 meters long and is a 3-phase, 4-wire Y, monthly electricity consumption will be 0.07 140-kilovolt-ampere (kVA) (subscribed gigawatt-hour (GWh). The internal electrical capacity) connection. wiring has been completed. Doing Business 2014 Bahamas, The 33 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity requires 5 procedures, takes 67 days and costs 102.2% connection in Bahamas, The? According to data of income per capita (figure 4.1). collected by Doing Business, getting electricity there Figure 4.1 What it takes to obtain an electricity connection in Bahamas, The Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Bahamas, The 34 GETTING ELECTRICITY Globally, Bahamas, The stands at 45 in the ranking of perspective in assessing how easy it is for an 189 economies on the ease of getting electricity entrepreneur in Bahamas, The to connect a warehouse (figure 4.2). The rankings for comparator economies to electricity. and the regional average ranking provide another Figure 4.2 How Bahamas, The and comparator economies rank on the ease of getting electricity Source: Doing Business database. Doing Business 2014 Bahamas, The 35 GETTING ELECTRICITY Even more helpful than rankings on the ease of getting performers on these indicators may provide useful electricity may be the indicators underlying those benchmarks. rankings (table 4.1). And regional and global best Table 4.1 The ease of getting electricity in Bahamas, The Best performer in Bahamas, The Bahamas, The Best performer Indicator Latin America & DB2014 DB2013 globally DB2014 Caribbean DB2014 Rank Trinidad and Tobago 45 43 Iceland (1) (10) Procedures (number) St. Vincent and the 5 5 10 Economies* (3) Grenadines (3) Time (days) 67 67 St. Kitts and Nevis (18) Germany (17) Cost (% of income per Trinidad and Tobago capita) 102.2 103.1 Japan (0.0) (7.0) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. * Two or more economies share the top ranking on this indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. Doing Business 2014 Bahamas, The 36 GETTING ELECTRICITY Obtaining an electricity connection is essential to safety in the connection process while keeping enable a business to conduct its most basic operations. connection costs reasonable, governments around the In many economies the connection process is world have worked to consolidate requirements for complicated by the multiple laws and regulations obtaining an electricity connection. What reforms in involved—covering service quality, general safety, getting electricity has Doing Business recorded in technical standards, procurement practices and Bahamas, The (table 4.2)? internal wiring installations. In an effort to ensure Table 4.2 How has Bahamas, The made getting electricity easier—or not? By Doing Business report year DB year Reform DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Source: Doing Business database. Doing Business 2014 Bahamas, The 37 GETTING ELECTRICITY What are the details? The indicators reported here for Bahamas, The are OBTAINING AN ELECTRICITY CONNECTION based on a set of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution City: Nassau utility—identified by Doing Business. Data are collected from the distribution utility, then completed and Name of Utility: Bahamas Electricity verified by electricity regulatory agencies and Corporation independent professionals such as electrical engineers, The procedures are those that apply to a warehouse electrical contractors and construction companies. The and electricity connection matching the standard electricity distribution utility surveyed is the one assumptions used by Doing Business in collecting the serving the area (or areas) in which warehouses are data (see the section in this chapter on what the located. If there is a choice of distribution utilities, the indicators cover). The procedures, along with the one serving the largest number of customers is associated time and cost, are summarized below. selected. Summary of procedures for getting electricity in Bahamas, The—and the time and cost Time to No. Procedure Cost to complete complete Receive site visit, estimate from Bahamas Electricity Corporation, and make payment The utility sends across a engineer from the planning dept. who conducts a site visit and prepares an estimate. A letter is then send to the 1 customer along with an invoice stating the cost of the connection works. 33 calendar days USD 20,000.0 The payment can be made at the two offices of the Bahamas Electricity Corporation by check, cash or credit card. The connection costs includes the cost of a distribution transformer and accessories. Request and receive final inspection from Ministry of Works, Building Control Dept. This is the final inspection done by the Ministry of Works, and the Inspector signs off on the certificate after ascertaining that all internal 21 calendar days no charge 2 wiring has been done satisfactorily. There are several rounds of internal wiring inspection conducted by the Ministry of Works during the construction of the warehouse. Bahamas Electricity Corporation conducts external connection works 3 This involves the construction of the mains extension, installation of the 28 calendar days no charge transformer and the installation of the service cable. Doing Business 2014 Bahamas, The 38 Time to No. Procedure Cost to complete complete Customer opens a electricity account with Bahamas Electicity Corporation In order to open an account, the customer should bring the following into BEC's Business Office on Blue Hill and Tucker Roads or at the Marathon Mall Office: • The original Electrical Installation Approval, a copy of the Occupancy Certificate (or occupancy exemption). These documents are issued by the Building Control Division of the Ministry of Works & Transport and can be obtained from the electrical or building contractor. • Two forms of personal identification, the National Insurance Card (a must), along with a valid Passport or Voters Card. In the case of non- working expatriates, a valid Passport (a must) along with a Social Security Card or Drivers License. 4 • Where the applicant is a Limited Company or Government Ministry, the 1 calendar day BSD 3,323.5 following is required: A letter on the Company's or Ministry's letterhead with the name of two (2) signatories, positions held, along with the Company's seal or Ministry's stamp affixed; along with the requirements in point 1. • The letter should state that the company / government ministry applies for the supply of electricity to certain named premises and authorizes the persons (also to be named) to sign on the Company's or Ministry's behalf. There ought to be two signatories on the Company's or Ministry's Account with the Corporation. The security deposit is only returned about termination of contract. An interest payment on this deposit is reimbursed as a deduction against electricity bill every month. Interest rate is 3%. Bahamas Electricity Corporation install meter and electricity starts flowing The service extension (transformer, service cable, etc.) has been 5 calendar days no charge 5 completed prior to the account being opened, and meter is now installed and electricity turned on. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2014 Bahamas, The 39 REGISTERING PROPERTY Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY Effective administration of land is part of that. If INDICATORS MEASURE formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly Procedures to legally transfer title on administered, it has little chance of being immovable property (number) accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens, finance. notarizing sales agreement, paying property transfer taxes) What do the indicators cover? Registration in the economy’s largest business Doing Business records the full sequence of city procedures necessary for a business to purchase property from another business and transfer the Postregistration (for example, filing title with the municipality) property title to the buyer’s name. The transaction is considered complete when it is opposable to Time required to complete each procedure third parties and when the buyer can use the (calendar days) property, use it as collateral for a bank loan or Does not include time spent gathering resell it. The ranking on the ease of registering information property is the simple average of the percentile rankings on its component indicators: procedures, Each procedure starts on a separate day. time and cost. Procedures that can be fully completed online are an exception to this rule. To make the data comparable across economies, Procedure considered completed once final several assumptions about the parties to the document is received transaction, the property and the procedures are used. No prior contact with officials The parties (buyer and seller): Cost required to complete each procedure (% of property value)  Are limited liability companies, 100% domestically and privately owned. Official costs only, no bribes  Are located in the economy’s largest No value added or capital gains taxes included business city. and no rezoning is required.  Have 50 employees each, all of whom are  Has no mortgages attached and has been nationals. under the same ownership for the past 10  Perform general commercial activities. years. The property (fully owned by the seller):  Consists of 557.4 square meters (6,000 square feet) of land and a 10-year-old, 2-story  Has a value of 50 times income per capita. warehouse of 929 square meters (10,000 The sale price equals the value. square feet). The warehouse is in good  Is registered in the land registry or cada- condition and complies with all safety stre, or both, and is free of title disputes. standards, building codes and legal requirements. There is no heating system. The  Is located in a periurban commercial zone, property will be transferred in its entirety. Doing Business 2014 Bahamas, The 40 REGISTERING PROPERTY Where does the economy stand today? What does it take to complete a property transfer in procedures, takes 122.0 days and costs 12.1% of the Bahamas, The? According to data collected by Doing property value (figure 5.1). Business, registering property there requires 7 Figure 5.1 What it takes to register property in Bahamas, The Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Bahamas, The 41 REGISTERING PROPERTY Globally, Bahamas, The stands at 182 in the ranking of and the regional average ranking provide other useful 189 economies on the ease of registering property information for assessing how easy it is for an (figure 5.2). The rankings for comparator economies entrepreneur in Bahamas, The to transfer property. Figure 5.2 How Bahamas, The and comparator economies rank on the ease of registering property Source: Doing Business database. Doing Business 2014 Bahamas, The 42 REGISTERING PROPERTY What are the changes over time? The benchmarks provided by the economies that over what is possible in making it easier to register time have had the best performance regionally or property. And changes in regional averages can show globally on the procedures, time or cost required to where Bahamas, The is keeping up—and where it is complete a property transfer (figure 5.3) help show falling behind. Figure 5.3 Has registering property become easier over time? Procedures (number) Time (days) Doing Business 2014 Bahamas, The 43 REGISTERING PROPERTY Cost (% of property value) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. For more information on “no practice” marks, see the data notes. Source: Doing Business database. Doing Business 2014 Bahamas, The 44 REGISTERING PROPERTY Economies worldwide have been making it easier for have cut the time required substantially—enabling entrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. What as by computerizing land registries, introducing time property registration reforms has Doing Business limits for procedures and setting low fixed fees. Many recorded in Bahamas, The (table 5.1)? Table 5.1 How has Bahamas, The made registering property easier—or not? By Doing Business report year DB year Reform The Bahamas made transferring property faster by introducing DB2009 a computerized system at the Registry of Records. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. The Bahamas made transferring property more costly by DB2012 increasing the applicable stamp duty fees. DB2013 No reform as measured by Doing Business. The Bahamas made transferring property easier by reducing DB2014 the stamp duty. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 45 REGISTERING PROPERTY What are the details? The indicators reported here are based on a set of STANDARD PROPERTY TRANSFER specific procedures—the steps that a buyer and seller must complete to transfer the property to the buyer’s name—identified by Doing Business through information collected from local property City: Nassau lawyers, notaries and property registries. These procedures are those that apply to a transaction Property Value: BSD 1,141,650 matching the standard assumptions used by Doing Business in collecting the data (see the section in The procedures, along with the associated time and this chapter on what the indicators cover). cost, are summarized below. Summary of procedures for registering property in Bahamas, The—and the time and cost Time to No. Procedure Cost to complete complete Drafting of contracts and exchange of contracts once agreed The contract stage, which can last 1-5 days, depending on the complexity of the transaction, would include the following steps: 2.5% of the value (1) The Seller's lawyer prepares a draft Agreement for Sale and submits of the property is it to the Buyer's lawyer for approval. payable on the (2) The Seller's lawyer forwards the final Agreement for Sale in duplicate. first B$500,000 (3) The Buyer's lawyer returns a signed Agreement for Sale (and deposits 2% of the value of part of the payment, usually 10% of the purchase price). the property is payable for that After the contract stage, the Buyer's lawyer would conduct the due part which is in diligence included in procedures 2, 3, and 4. As part of the due 1 day excess of 1 diligence, the Buyer’s lawyer may forward requisitions. Once the due B$500,000, but diligence is completed, the buyer's lawyer forwards the draft Conveyance does not exceed to the seller's lawyer for approval. B$1,000,000 The Bahamas Bar Association has a sliding scale of fees for property 1% of the value transactions, which is based on the valued of the property: that is in excess of 2.5% of the value of the property is payable on the first B$500,000 B$1,000,000, but 2% of the value of the property is payable for that part which is in excess does not exceed of B$500,000, but does not exceed B$1,000,000 B$5,000,000. 1% of the value that is in excess of B$1,000,000, but does not exceed B$5,000,000.> Doing Business 2014 Bahamas, The 46 Time to No. Procedure Cost to complete complete * Lawyer or his clerk checks for encumbrances at the Registry of records (regarding any mortgages on the property) Searches are conducted by search clerks or lawyers. Documents recorded at the Registry of Records are available on microfilm up to 2003. From 2003 onwards documents recorded have been scanned and may be accessed online. 1 - 2 months Cost included in (simultaneous 2 lawyer's fees When the parties hire a large law firm, the firm usually does this with Procedures (procedure 1) Documents search, together with the Court Cause List search of 3, 4, and 5) Procedure 3 and the Company Search of Procedure 4, in house. The firm does not charge an extra fee for these searches, i.e. it is included in the conveyance fee. When an independent party is hired to conduct the searches, the fee is 300-350 USD per lot searched. * Lawyer checks for judgments against the property at the Supreme Court 1 day Cost included in This search is conducted to check if there are any judgments affecting (simultaneous 3 lawyer's fees the property, since charges imposed by judicial decisions could be levied with Procedures (procedure 1) on the property, regardless of who the owner is. 2, 4 and 5) * Lawyer checks for other companies using the same property at the Company Registrar Searches are done at the Companies Registry only if a company now 1 day Cost included in owns or previously owned the land. Searches are done to ensure that (simultaneous 4 lawyer's fees the company was existing and duly incorporated during the period of its with Procedures (procedure 1) ownership of the property and to ensure that any conveyance executed 1,2 and 4) by it was executed in accordance with the Articles of Association. * Real property tax status enquiry with the Valuation office of the Ministry of Finance. Although not required by law, it is common for the lawyer to also check if real property taxes on the property are current as they are a first 1 day Cost included in charge on the property. If the seller hasn’t paid them in the past, the new (simultaneous lawyer's fees 5 owner will inherit the taxes. In addition to this procedure, the buyer's with Procedure 2, (procedure 1) lawyer might also chose to make an inquiry with utility companies (water, 3, and 4) electricity and phone/cable). Such inquiry could be conducted within 2 weeks. Doing Business 2014 Bahamas, The 47 Time to No. Procedure Cost to complete complete Payment of Stamp Duty Stamp duty is payable as a percent of the value of the property. Paid at the Public Treasury. The rates for stamp duty are as follows: Stamp duty is payable as a percent of the value of the property. The rates of stamp duty applicable to deeds of conveyance, assignments or transfers of realty, as per the Stamp (Amendment) Act of July 1, 2012, 10% of property 6 effective January 1, 2013 are as follows: 1 day value • When the amount or value does not exceed $20,000, the rate is 4%. • Exceeding $20,000, but not exceeding $50,000, the rate is 6%. • Exceeding $50,000, but not exceeding $100,000, the rate is 8%. • Exceeding $100,000,the rate is 10%. Lodge the conveyance for recording at registry of records It usually takes 2 to 3 months for the Registry of Records to record a property transfer and return the supporting documentation after it has been filed for recording. In order to file for registration, the affidavits of the witnesses to the convayance have to be notarized. This procedure is not necessary for the 2-3 months BSD 4.5 per page 7 validity of the conveyance, but it is a requirement under the Registration of Records Act (Ch. 187 Statute Laws of The Bahamas, 2000 Edition) to record the transfer. Any licenced notary public can do it at a cost of BSD30 to BSD 50, and in most cases lawyers have a notary public licence, in which case they may do it themselves. In this case, the fee is included in the lawyer's overall fees charged in procedure 1. * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2014 Bahamas, The 48 GETTING CREDIT Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS credit and improve its allocation: credit information MEASURE systems and borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders’ rights to view a potential borrower’s Strength of legal rights index (0–10) financial history (positive or negative)—valuable Rights of borrowers and lenders through information to consider when assessing risk. And collateral laws they permit borrowers to establish a good credit Protection of secured creditors’ rights through history that will allow easier access to credit. Sound bankruptcy laws collateral laws enable businesses to use their assets, especially movable property, as security to generate Depth of credit information index (0–6) capital—while strong creditors’ rights have been Scope and accessibility of credit information associated with higher ratios of private sector credit distributed by public credit registries and to GDP. private credit bureaus What do the indicators cover? Public credit registry coverage (% of adults) Doing Business assesses the sharing of credit Number of individuals and firms listed in information and the legal rights of borrowers and public credit registry as percentage of adult lenders with respect to secured transactions population through 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults) information index measures rules and practices Number of individuals and firms listed in affecting the coverage, scope and accessibility of largest private credit bureau as percentage of credit information available through a public credit adult population registry or a private credit bureau. The strength of legal rights index measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. Doing Business uses case scenarios to determine the scope of the  Has up to 100 employees. secured transactions system, involving a secured  Is 100% domestically owned, as is the lender. borrower and a secured lender and examining legal The ranking on the ease of getting credit is based on restrictions on the use of movable collateral. These the percentile rankings on the sum of its component scenarios assume that the borrower: indicators: the depth of credit information index and  Is a private, incorporated, limited liability the strength of legal rights index. company.  Has its headquarters and only base of operations in the largest business city. Doing Business 2014 Bahamas, The 49 GETTING CREDIT Where does the economy stand today? How well do the credit information system and Globally, Bahamas, The stands at 86 in the ranking of collateral and bankruptcy laws in Bahamas, The 189 economies on the ease of getting credit (figure facilitate access to credit? The economy has a score of 6.1). The rankings for comparator economies and the 0 on the depth of credit information index and a score regional average ranking provide other useful of 9 on the strength of legal rights index (see the information for assessing how well regulations and summary of scoring at the end of this chapter for institutions in Bahamas, The support lending and details). Higher scores indicate more credit information borrowing. and stronger legal rights for borrowers and lenders. Figure 6.1 How Bahamas, The and comparator economies rank on the ease of getting credit Source: Doing Business database. Doing Business 2014 Bahamas, The 50 GETTING CREDIT What are the changes over time? While the most recent Doing Business data reflect how institutions and regulations have been strengthened — well the credit information system and collateral and and where they have not (table 6.1). That can help bankruptcy laws in Bahamas, The support lending and identify where the potential for improvement is borrowing today, data over time can help show where greatest. Table 6.1 The ease of getting credit in Bahamas, The over time By Doing Business report year Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 DB2014 Rank .. .. .. .. .. .. .. .. 82 86 Strength of legal rights n.a. n.a. n.a. 9 9 9 9 9 9 9 index (0-10) Depth of credit n.a. n.a. n.a. 0 0 0 0 0 0 0 information index (0-6) Public registry coverage n.a. n.a. n.a. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (% of adults) Private bureau n.a. n.a. n.a. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 coverage (% of adults) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Bahamas, The 51 GETTING CREDIT One way to put an economy’s score on the getting and shows the number of economies with this score in credit indicators into context is to see where the 2013 as well as the regional average score. Figure 6.3 economy stands in the distribution of scores across shows the same thing for the depth of credit economies. Figure 6.2 highlights the score on the information index. strength of legal rights index for Bahamas, The in 2013 Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared— and lenders? and how widely? Number of economies with each score on strength of legal Number of economies with each score on depth of credit rights index (0–10), 2013 information index (0–6), 2013 Note: Higher scores indicate that collateral and bankruptcy Note: Higher scores indicate the availability of more credit laws are better designed to facilitate access to credit. information, from either a credit registry or a credit bureau, Source: Doing Business database. to facilitate lending decisions. Regional averages for the depth of credit information index exclude economies with no credit registry or credit bureau. Source: Doing Business database. Doing Business 2014 Bahamas, The 52 GETTING CREDIT When economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs’ and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doing and increase the scope, coverage and accessibility of Business recorded in Bahamas, The (table 6.2)? Table 6.2 How has Bahamas, The made getting credit easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 53 GETTING CREDIT What are the details? The getting credit indicators reported here for The data on the legal rights of borrowers and lenders Bahamas, The are based on detailed information are gathered through a survey of financial lawyers and collected in that economy. The data on credit verified through analysis of laws and regulations as information sharing are collected through a survey of a well as public sources of information on collateral and credit registry and/or credit bureau (if one exists). To bankruptcy laws. For the strength of legal rights index, construct the depth of credit information index, a a score of 1 is assigned for each of 8 aspects related to score of 1 is assigned for each of 6 features of the legal rights in collateral law and 2 aspects in credit registry or credit bureau (see summary of bankruptcy law. scoring below). Summary of scoring for the getting credit indicators in Bahamas, The Latin America & OECD high income Indicator Bahamas, The Caribbean average average Strength of legal rights index (0-10) 9 6 7 Depth of credit information index (0-6) 0 5 5 Public registry coverage (% of adults) 0.0 31.5 42.9 Private bureau coverage (% of adults) 0.0 63.1 73.9 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Regional averages for the depth of credit information index exclude economies with no credit registry or credit bureau. Regional averages for the credit registry coverage exclude economies with no credit registry. Regional averages for the credit bureau coverage exclude economies with no credit bureau. Strength of legal rights index (0–10) Index score: 9 Can any business use movable assets as collateral while keeping possession of the assets; and Yes any financial institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of Yes movable assets, without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of Yes its assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically Yes to the products, proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement Yes include a maximum amount for which the assets are encumbered? Is a collateral registry in operation, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's names? Doing Business 2014 Bahamas, The 54 Strength of legal rights index (0–10) Index score: 9 Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor Yes defaults outside an insolvency procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is No liquidated? Are secured creditors either not subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure, or does the law provide secured Yes creditors with grounds for relief from an automatic stay or/and sets a time limit to it? Does the law allow parties to agree in a collateral agreement that the lender may enforce its Yes security right out of court, at the time a security interest is created? Depth of credit information index (0–6) Credit bureau Credit registry Index score: 0 Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade creditors or utility companies as well as No No 0 financial institutions? Are more than 2 years of historical credit information No No 0 distributed? Is data on all loans below 1% of income per capita No No 0 distributed? Is it guaranteed by law that borrowers can inspect No No 0 their data in the largest credit registry? Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry. Credit bureau Credit registry Coverage (% of adults) (% of adults) Number of firms 0 0 Number of individuals 0 0 Source: Doing Business database. Doing Business 2014 Bahamas, The 55 PROTECTING INVESTORS Protecting investors matters for the ability of WHAT THE PROTECTING INVESTORS companies to raise the capital they need to grow, INDICATORS MEASURE innovate, diversify and compete. If the laws do not protect minority shareholders, investors may be reluctant to provide funding to companies through Extent of disclosure index (0–10) the purchase of shares unless they become the Approval process for related-party controlling shareholders. Effective regulations define transactions related-party transactions precisely, promote clear Disclosure requirements in case of related- and efficient disclosure requirements, require party transactions shareholder participation in major decisions of the company and set detailed standards of accountability Extent of director liability index (0–10) for company insiders. Ability of minority shareholders to file a direct or derivative lawsuit What do the indicators cover? Ability of minority shareholders to hold Doing Business measures the strength of minority interested parties and members of the shareholder protections against directors’ use of approving body liable for prejudicial related- corporate assets for personal gain—or self-dealing. party transactions The indicators distinguish 3 dimensions of investor protections: transparency of related-party Available legal remedies (damages, repayment of profits, fines, imprisonment and rescission transactions (extent of disclosure index), liability for of the transaction) self-dealing (extent of director liability index) and minority shareholders’ access to evidence before and Ease of shareholder suits index (0–10) during trial (ease of shareholder suits index). The Access to internal corporate documents ranking on the strength of investor protection index is (directly or through a government inspector) the simple average of the percentile rankings on these 3 indices. To make the data comparable across Documents and information available during trial economies, a case study uses several assumptions about the business and the transaction. Strength of investor protection index (0–10) The business (Buyer): Simple average of the extent of disclosure, extent of director liability and ease of  Is a publicly traded corporation listed on the shareholder suits indices economy’s most important stock exchange (or at least a large private company with multiple shareholders). the company purchase used trucks from another company he owns.  Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of  The price is higher than the going price for used Buyer where permitted, even if this is not trucks, but the transaction goes forward. specifically required by law.  All required approvals are obtained, and all The transaction involves the following details: required disclosures made, though the transaction is prejudicial to Buyer.  Mr. James, a director and the majority shareholder of the company, proposes that  Shareholders sue the interested parties and the members of the board of directors. Doing Business 2014 Bahamas, The 56 PROTECTING INVESTORS Where does the economy stand today? How strong are investor protections against self- index (figure 7.1). While the indicator does not dealing in Bahamas, The? The economy has a score of measure all aspects related to the protection of 4.7 on the strength of investor protection index, with a minority investors, a higher ranking does indicate that higher score indicating stronger protections (see the an economy’s regulations offer stronger investor summary of scoring at the end of this chapter for protections against self-dealing in the areas measured. details). Globally, Bahamas, The stands at 115 in the ranking of 189 economies on the strength of investor protection Figure 7.1 How Bahamas, The and comparator economies rank on the strength of investor protection index Source: Doing Business database. Doing Business 2014 Bahamas, The 57 PROTECTING INVESTORS What are the changes over time? While the most recent Doing Business data reflect how the global ranking on the strength of investor well regulations in Bahamas, The protect minority protection index over time shows whether the investors today, data over time show whether the economy is slipping behind other economies in protections have been strengthened (table 7.1). And investor protections—or surpassing them. Table 7.1 The strength of investor protections in Bahamas, The over time By Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 DB2014 Rank .. .. .. .. .. .. .. 113 115 Extent of disclosure n.a. n.a. 2 2 2 2 2 2 2 index (0-10) Extent of director n.a. n.a. 5 5 5 5 5 5 5 liability index (0-10) Ease of shareholder n.a. n.a. 7 7 7 7 7 7 7 suits index (0-10) Strength of investor protection index (0- n.a. n.a. 4.7 4.7 4.7 4.7 4.7 4.7 4.7 10) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Bahamas, The 58 PROTECTING INVESTORS One way to put an economy’s scores on the protecting and shows the number of economies with this score in investors indicators into context is to see where the 2013 as well as the regional average score. Figure 7.3 economy stands in the distribution of scores across applies to the extent of director liability index, and economies. Figure 7.2 highlights the score on the figure 7.4 to the ease of shareholder suits index. extent of disclosure index for Bahamas, The in 2013 Figure 7.2 How strong are disclosure requirements? Figure 7.3 How strong is the liability regime for directors? Number of economies with each score on the extent of Number of economies with each score on the extent of director liability index (0–10), 2013 disclosure index (0–10), 2013 Note: Higher scores indicate greater liability of directors. Note: Higher scores indicate greater disclosure. Source: Doing Business database. Source: Doing Business database. Doing Business 2014 Bahamas, The 59 PROTECTING INVESTORS Figure 7.4 How easy is accessing internal corporate documents? Number of economies with each score on the ease of shareholder suits index (0–10), 2013 Note: Higher scores indicate greater minority shareholder access to evidence before and during trial. Source: Doing Business database. Doing Business 2014 Bahamas, The 60 PROTECTING INVESTORS The scores recorded over time for Bahamas, The on changes over time in the regional average score on the strength of investor protection index may also be this index. revealing (figure 7.5). Equally interesting may be the Figure 7.5 Have investor protections become stronger over time? Strength of investor protection index (0–10) Note: The higher the score, the stronger the protections. Source: Doing Business database. Doing Business 2014 Bahamas, The 61 PROTECTING INVESTORS Economies with the strongest protections of minority reasonable time. As a result, reforms to strengthen investors from self-dealing require detailed disclosure investor protections may move ahead on different and define clear duties for directors. They also have fronts—such as through new or amended company well-functioning courts and up-to-date procedural laws, securities regulations or civil procedure rules. rules that give minority shareholders the means to What investor protection reforms has Doing Business prove their case and obtain a judgment within a recorded in Bahamas, The (table 7.2)? Table 7.2 How has Bahamas, The strengthened investor protections—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 62 PROTECTING INVESTORS What are the details? The protecting investors indicators reported here for are assigned to each based on a range of conditions Bahamas, The are based on detailed information relating to disclosure, director liability and shareholder collected through a survey of corporate and securities suits in a standard case study transaction (see the data lawyers about securities regulations, company laws notes at the end of this chapter). The summary below and court rules of evidence and procedure. To shows the details underlying the scores for Bahamas, construct the extent of disclosure, extent of director The. liability and ease of shareholder suits indices, scores Summary of scoring for the protecting investors indicators in Bahamas, The Latin America & OECD high income Indicator Bahamas, The Caribbean average average Extent of disclosure index (0-10) 2 4 7 Extent of director liability index (0-10) 5 5 5 Ease of shareholder suits index (0-10) 7 6 7 Strength of investor protection index (0-10) 4.7 4.9 6.2 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Score Score description Extent of disclosure index (0-10) 2 What corporate body provides legally sufficient Board of directors and Mr. James is 1 approval for the transaction? allowed to vote Whether disclosure of the conflict of interest by Mr. Existence of a conflict without any 1 James to the board of directors is required? specifics Whether immediate disclosure of the transaction to 0 No disclosure obligation the public and/or shareholders is required? Whether disclosure of the transaction in published 0 No disclosure obligation periodic filings (annual reports) is required? Whether an external body must review the terms of 0 No the transaction before it takes place? Extent of director liability index (0-10) 5 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction 1 Yes causes to the company? Whether shareholders can hold Mr. James liable for Liable for negligence or influencing the damage that the Buyer-Seller transaction causes 1 the approval of the transaction to the company? Doing Business 2014 Bahamas, The 63 Score Score description Whether shareholders can hold members of the approving body liable for the damage that the Buyer- 1 Liable for negligence Seller transaction causes to the company? Whether a court can void the transaction upon a Not possible or only in case of Seller's 0 successful claim by a shareholder plaintiff? fraud or bad faith Whether Mr. James pays damages for the harm caused to the company upon a successful claim by 1 Yes the shareholder plaintiff? Whether Mr. James repays profits made from the transaction upon a successful claim by the 1 Yes shareholder plaintiff? Whether fines and imprisonment can be applied 0 No against Mr. James? Ease of shareholder suits index (0-10) 7 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before 0 No filing suit? Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the 0 No transaction? Whether the plaintiff can obtain any documents from Any information that is relevant to the 3 the defendant and witnesses during trial? subject matter of the claim Whether the plaintiff can request categories of documents from the defendant without identifying 1 Yes specific ones? Whether the plaintiff can directly question the 2 Yes, without approval from the judge defendant and witnesses during trial? Whether the level of proof required for civil suits is 1 Yes lower than that of criminal cases? Strength of investor protection index (0-10) 4.7 Source: Doing Business database. Doing Business 2014 Bahamas, The 64 PAYING TAXES Taxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORS infrastructure and services that are crucial for a MEASURE properly functioning economy. But the level of tax rates needs to be carefully chosen—and needless Tax payments for a manufacturing company complexity in tax rules avoided. According to in 2012 (number per year adjusted for Doing Business data, in economies where it is more electronic and joint filing and payment) difficult and costly to pay taxes, larger shares of economic activity end up in the informal sector— Total number of taxes and contributions paid, where businesses pay no taxes at all. including consumption taxes (value added tax, sales tax or goods and service tax) What do the indicators cover? Method and frequency of filing and payment Using a case scenario, Doing Business measures Time required to comply with 3 major taxes the taxes and mandatory contributions that a (hours per year) medium-size company must pay in a given year as well as the administrative burden of paying taxes Collecting information and computing the tax and contributions. This case scenario uses a set of payable financial statements and assumptions about Completing tax return forms, filing with transactions made over the year. Information is proper agencies also compiled on the frequency of filing and Arranging payment or withholding payments as well as time taken to comply with tax laws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, if the simple average of the percentile rankings on required its component indicators: number of annual Total tax rate (% of profit before all taxes) payments, time and total tax rate, with a threshold 1 Profit or corporate income tax being applied to the total tax rate. To make the data comparable across economies, several Social contributions and labor taxes paid by assumptions about the business and the taxes and the employer contributions are used. Property and property transfer taxes  TaxpayerCo is a medium-size business that Dividend, capital gains and financial started operations on January 1, 2011. transactions taxes  The business starts from the same financial Waste collection, vehicle, road and other taxes position in each economy. All the taxes  Taxes and mandatory contributions include and mandatory contributions paid during corporate income tax, turnover tax and all the second year of operation are recorded. labor taxes and contributions paid by the  Taxes and mandatory contributions are company. measured at all levels of government.  A range of standard deductions and exemptions are also recorded. 1 The threshold is defined as the highest total tax rate among the top 15% of economies in the ranking on the total tax rate. It is calculated and adjusted on a yearly basis. The threshold is not based on any economic theory of an “optimal tax rate” that minimizes distortions or maximizes efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). This year’s threshold is 25.5%. Doing Business 2014 Bahamas, The 65 PAYING TAXES Where does the economy stand today? What is the administrative burden of complying with Globally, Bahamas, The stands at 45 in the ranking of taxes in Bahamas, The—and how much do firms pay in 189 economies on the ease of paying taxes (figure 8.1). taxes? On average, firms make 18 tax payments a year, The rankings for comparator economies and the spend 58 hours a year filing, preparing and paying regional average ranking provide other useful taxes and pay total taxes amounting to 46.6% of profit information for assessing the tax compliance burden (see the summary at the end of this chapter for for businesses in Bahamas, The. details). Figure 8.1 How Bahamas, The and comparator economies rank on the ease of paying taxes Source: Doing Business database. Doing Business 2014 Bahamas, The 66 PAYING TAXES What are the changes over time? The benchmarks provided by the economies that over show what is possible in easing the administrative time have had the best performance regionally or burden of tax compliance. And changes in regional globally on the number of payments or the time averages can show where Bahamas, The is keeping required to prepare and file taxes (figure 8.2) help up—and where it is falling behind. Figure 8.2 Has paying taxes become easier over time? Payments (number per year) Time (hours per year) Doing Business 2014 Bahamas, The 67 PAYING TAXES Total tax rate (% of profit) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. DB2013 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 25.5% applied in DB2014, the total tax rate is set at 25.5% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database. Doing Business 2014 Bahamas, The 68 PAYING TAXES Economies around the world have made paying taxes concrete results. Some economies simplifying tax faster and easier for businesses—such as by payment and reducing rates have seen tax revenue consolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded in payments or offering electronic filing and payment. Bahamas, The (table 8.1)? Many have lowered tax rates. Changes have brought Table 8.1 How has Bahamas, The made paying taxes easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 69 PAYING TAXES What are the details? The indicators reported here for Bahamas, The are LOCATION OF STANDARDIZED COMPANY based on a standard set of taxes and contributions that would be paid by the case study company used by Doing Business in collecting the data (see City: Nassau the section in this chapter on what the indicators cover). Tax practitioners are asked to review standard financial statements as well as a standard list of transactions that the company completed The taxes and contributions paid are listed in the during the year. Respondents are asked how much summary below, along with the associated number of in taxes and mandatory contributions the business payments, time and tax rate. must pay and what the process is for doing so. Summary of tax rates and administrative burden in Bahamas, The Latin America & OECD high income Indicator Bahamas, The Caribbean average average Payments (number per year) 18 30 12 Time (hours per year) 58 369 175 Profit tax (%) 0.0 20.5 16.1 Labor tax and contributions (%) 6.1 14.7 23.1 Other taxes (%) 40.5 12.1 2.0 Total tax rate (% profit) 46.6 47.3 41.3 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate turnover 1.5% or or flat fee Business license fee 1 10 33 $500,000 (whichever is greater) Employer paid - Social gross 12 48 5.9% 6.1 security contributions salaries Stamp duty 1 0 10% sale price 5.1 Doing Business 2014 Bahamas, The 70 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate market Property tax 1 0 1% and 2% value of 1.6 property $100 or 1.5% if land market Land Tax 1 0 value is value of 0.8 higher than land $7000 Vehicle tax 1 0 $195-745 variable 0 included small Fuel tax 1 0 into fuel 0 amount price Totals 18 58 46.6 Source: Doing Business database. Doing Business 2014 Bahamas, The 71 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to Documents required to export and import extra costs and delays for exporters and importers, (number) stifling trade potential. Research shows that Bank documents exporters in developing countries gain more from Customs clearance documents a 10% drop in their trading costs than from a similar reduction in the tariffs applied to their Port and terminal handling documents products in global markets. Transport documents What do the indicators cover? Time required to export and import (days) Doing Business measures the time and cost Obtaining, filling out and submitting all the (excluding tariffs and the time and cost for sea documents transport) associated with exporting and importing Inland transport and handling a standard shipment of goods by sea transport, and the number of documents necessary to Customs clearance and inspections complete the transaction. The indicators cover Port and terminal handling procedural requirements such as documentation Does not include sea transport time requirements and procedures at customs and other regulatory agencies as well as at the port. They also Cost required to export and import (US$ per cover trade logistics, including the time and cost of container) inland transport to the largest business city. The All documentation ranking on the ease of trading across borders is the simple average of the percentile rankings on its Inland transport and handling component indicators: documents, time and cost Customs clearance and inspections to export and import. Port and terminal handling To make the data comparable across economies, Official costs only, no bribes Doing Business uses several assumptions about the business and the traded goods. The business: military items.  Is of medium size and employs 60 people.  Do not require refrigeration or any other special environment.  Is located in the periurban area of the economy’s largest business city.  Do not require any special phytosanitary or environmental safety standards other than  Is a private, limited liability company, accepted international standards. domestically owned, formally registered and operating under commercial laws and  Are one of the economy’s leading export or regulations of the economy. import products. The traded goods:  Are transported in a dry-cargo, 20-foot full container load.  Are not hazardous nor do they include Doing Business 2014 Bahamas, The 72 TRADING ACROSS BORDERS Where does the economy stand today? What does it take to export or import in Bahamas, Globally, Bahamas, The stands at 72 in the ranking of The? According to data collected by Doing Business, 189 economies on the ease of trading across borders exporting a standard container of goods requires 5 (figure 9.1). The rankings for comparator economies documents, takes 19 days and costs $1005. Importing and the regional average ranking provide other useful the same container of goods requires 5 documents, information for assessing how easy it is for a business takes 13 days and costs $1770 (see the summary of in Bahamas, The to export and import goods. procedures and documents at the end of this chapter for details). Figure 9.1 How Bahamas, The and comparator economies rank on the ease of trading across borders Source: Doing Business database. Doing Business 2014 Bahamas, The 73 TRADING ACROSS BORDERS What are the changes over time? The benchmarks provided by the economies that over possible in making it easier to trade across borders. time have had the best performance regionally or And changes in regional averages can show where globally on the documents, time or cost required to Bahamas, The is keeping up—and where it is falling export or import (figure 9.2) help show what is behind. Figure 9.2 Has trading across borders become easier over time? Documents to export (number) Time to export (days) Doing Business 2014 Bahamas, The 74 TRADING ACROSS BORDERS Cost to export (US$ per container) Documents to import (number) Doing Business 2014 Bahamas, The 75 TRADING ACROSS BORDERS Time to import (days) Cost to import (US$ per container) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Bahamas, The 76 TRADING ACROSS BORDERS In economies around the world, trading across borders systems. These changes help improve the trading as measured by Doing Business has become faster and environment and boost firms’ international easier over the years. Governments have introduced competitiveness. What trade reforms has Doing tools to facilitate trade—including single windows, Business recorded in Bahamas, The (table 9.1)? risk-based inspections and electronic data interchange Table 9.1 How has Bahamas, The made trading across borders easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 77 TRADING ACROSS BORDERS What are the details? The indicators reported here for Bahamas, The are LOCATION OF STANDARDIZED COMPANY based on a set of specific procedural requirements for trading a standard shipment of goods by ocean transport (see the section in this chapter on what City: Nassau the indicators cover). Information on the procedures as well as the required documents and the time and cost to complete each procedure is The procedural requirements, and the associated time collected from local freight forwarders, shipping and cost, for exporting and importing a standard lines, customs brokers, port officials and banks. shipment of goods are listed in the summary below, along with the required documents. Summary of procedures and documents for trading across borders in Bahamas, The Latin America & OECD high income Indicator Bahamas, The Caribbean average average Documents to export (number) 5 6 4 Time to export (days) 19 17 11 Cost to export (US$ per container) 1,005 1,283 1,070 Documents to import (number) 5 7 4 Time to import (days) 13 19 10 Cost to import (US$ per container) 1,770 1,676 1,090 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Procedures to export Time (days) Cost (US$) Documents preparation 10 375 Customs clearance and technical control 3 130 Ports and terminal handling 4 200 Inland transportation and handling 2 300 Totals 19 1,005 Procedures to import Time (days) Cost (US$) Documents preparation 7 300 Doing Business 2014 Bahamas, The 78 Procedures to import Time (days) Cost (US$) Customs clearance and technical control 3 220 Ports and terminal handling 2 950 Inland transportation and handling 1 300 Totals 13 1,770 Documents to export Documents to import Bill of lading Bill of lading Cargo release order Cargo release order Commercial invoice Commercial invoice Customs export declaration Customs Import Declaration Form Packing list Packing list Source: Doing Business database. Doing Business 2014 Bahamas, The 79 ENFORCING CONTRACTS Effective commercial dispute resolution has many WHAT THE ENFORCING CONTRACTS benefits. Courts are essential for entrepreneurs INDICATORS MEASURE because they interpret the rules of the market and protect economic rights. Efficient and transparent Procedures to enforce a contract through courts encourage new business relationships the courts (number) because businesses know they can rely on the courts if a new customer fails to pay. Speedy trials Steps to file and serve the case are essential for small enterprises, which may lack Steps for trial and judgment the resources to stay in business while awaiting the outcome of a long court dispute. Steps to enforce the judgment Time required to complete procedures What do the indicators cover? (calendar days) Doing Business measures the efficiency of the Time to file and serve the case judicial system in resolving a commercial dispute before local courts. Following the step-by-step Time for trial and obtaining judgment evolution of a standardized case study, it collects Time to enforce the judgment data relating to the time, cost and procedural complexity of resolving a commercial lawsuit. The Cost required to complete procedures (% of ranking on the ease of enforcing contracts is the claim) simple average of the percentile rankings on its Average attorney fees component indicators: procedures, time and cost. Court costs The dispute in the case study involves the breach Enforcement costs of a sales contract between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. To make the data comparable across economies, Doing Business uses several assumptions about the case:  The seller and buyer are located in the economy’s largest business city.  The dispute on the quality of the goods requires an expert opinion.  The buyer orders custom-made goods, then fails to pay.  The judge decides in favor of the seller; there is no appeal.  The seller sues the buyer before a competent court.  The seller enforces the judgment through a public sale of the buyer’s movable assets.  The value of the claim is 200% of income per capita.  The seller requests a pretrial attachment to secure the claim. Doing Business 2014 Bahamas, The 80 ENFORCING CONTRACTS Where does the economy stand today? How efficient is the process of resolving a commercial Globally, Bahamas, The stands at 125 in the ranking of dispute through the courts in Bahamas, The? 189 economies on the ease of enforcing contracts According to data collected by Doing Business, (figure 10.1). The rankings for comparator economies contract enforcement takes 427 days, costs 28.9% of and the regional average ranking provide other useful the value of the claim and requires 49 procedures (see benchmarks for assessing the efficiency of contract the summary at the end of this chapter for details). enforcement in Bahamas, The. Figure 10.1 How Bahamas, The and comparator economies rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2014 Bahamas, The 81 ENFORCING CONTRACTS What are the changes over time? The benchmarks provided by the economies that over help show what is possible in improving the efficiency time have had the best performance regionally or of contract enforcement. And changes in regional globally on the number of steps, time or cost required averages can show where Bahamas, The is keeping to enforce a contract through the courts (figure 10.2) up—and where it is falling behind. Figure 10.2 Has enforcing contracts become easier over time? Time (days) Cost (% of claim) Doing Business 2014 Bahamas, The 82 ENFORCING CONTRACTS Procedures (number) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Bahamas, The 83 ENFORCING CONTRACTS Economies in all regions have improved contract periodic reviews to clear inactive cases from the docket enforcement in recent years. A judiciary can be and by making procedures faster. What reforms improved in different ways. Higher-income economies making it easier (or more difficult) to enforce contracts tend to look for ways to enhance efficiency by has Doing Business recorded in Bahamas, The (table introducing new technology. Lower-income economies 10.1)? often work on reducing backlogs by introducing Table 10.1 How has Bahamas, The made enforcing contracts easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 84 ENFORCING CONTRACTS What are the details? The indicators reported here for Bahamas, The are COURT NAME based on a set of specific procedural steps required to resolve a standardized commercial dispute through the courts (see the section in this City: Nassau chapter on what the indicators cover). These procedures, and the time and cost of completing Claim Value LCU: 46350 them, are identified through study of the codes of civil procedure and other court regulations, as well Nassau Supreme Court of as through surveys completed by local litigation Court Name: the Commonwealth of lawyers (and, in a quarter of the economies the Bahamas covered by Doing Business, by judges as well). The procedures for resolving a commercial lawsuit, and the associated time and cost, are listed in the summary below. Summary of procedures for enforcing a contract in Bahamas, The—and the time and cost Latin America & OECD high income Indicator Bahamas, The Caribbean average average Time (days) 427 734 529 Filing and service 7 Trial and judgment 240 Enforcement of judgment 180 Cost (% of claim) 28.9 31.0 21.0 Attorney cost (% of claim) 18.0 Court cost (% of claim) 2.9 Enforcement Cost (% of claim) 8.0 Procedures (number) 49 40 31 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Doing Business 2014 Bahamas, The 85 ENFORCING CONTRACTS No. Procedure Filing and service: Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the 1 contract. 2 Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to represent him before the court. Plaintiff’s filing of summons and complaint: Plaintiff files his summons and complaint with the court, orally * or in writing. * Plaintiff’s payment of court fees: Plaintiff pays court duties, stamp duties, or any other type of court fee. Registration of court case: The court administration registers the lawsuit or court case. This includes 3 assigning a reference number to the lawsuit or court case. Assignment of court case to a judge: The court case is assigned to a specific judge through a random * procedure, automated system, ruling of an administrative judge, court officer, etc. Arrangements for physical delivery of summons and complaint: Plaintiff takes whatever steps are * necessary to arrange for physical service of process on Defendant, such as instructing a court officer or a (private) bailiff. First attempt at physical delivery: A first attempt to physically deliver summons and complaint to 4 Defendant is successful in the majority of cases. * Proof of service: Plaintiff submits proof of service to court. Pre-judgment attachment.: Defendant's property is attached prior to judgment. Attachment is either 5 physical or achieved by registering, marking, debiting or separating assets. (see assumption 5) Hearing on pre-judgment attachment: A hearing takes place to resolve the question of whether 6 Defendant’s assets can be attached prior to judgment. This process may include the submission of separate summons and petitions. (see assumption 5) Trial and judgment: Defendant’s deposit of a bond or payment guarantee with the court: Defendant deposits a bond or 7 guarantee with the court. Defendant’s filing of defense or answer to Plaintiff’s claim: Defendant files a written pleading which includes his defense or answer on the merits of the case. Defendant's written answer may or may not 8 include witness statements, expert statements, the documents Defendant relies on as evidence and the legal authori Plaintiff’s written response to Defendant's defense or answer: Plaintiff responds to Defendant’s defense or 9 answer with a written pleading. Plaintiff's answer may or may not include a witness statements or expert (witness) statements. Doing Business 2014 Bahamas, The 86 No. Procedure Filing of pleadings: Plaintiff and Defendant file written pleadings and submissions with the court and 10 transmit copies of the written pleadings or submissions to one another. The pleadings may or may not include witness statements or expert (witness) statements. Adjournments: Court procedure is delayed because one or both parties request and obtain an 11 adjournment to submit written pleadings. Framing of issues: Plaintiff and Defendant assist the court in framing issues on which evidence is to be 12 presented. Pre-trial conference on procedure: The judge meets with the parties to discuss procedural issues (for 13 example which applications and motions parties intend to file, which documents parties intend to rely on, what will be presented as evidence the oral hearing or trial, etc.) Setting of date for mediation hearing: The judge sets a date for a mediation hearing, sometimes also * called a 'pre-trial conference,' and notifies the parties of the hearing date. Request for interlocutory order: Defendant raises preliminary issues, such as jurisdiction, statute of * limitation, etc. Court’s issuance of interlocutory order: Court decides the preliminary issues the Defendant raised by * issuing an interlocutory order. Plaintiff’s appeal of court's interlocutory order: Plaintiff appeals the court's interlocutory order, which 14 suspends the court proceedings. Discovery requests: Plaintiff and Defendant make requests for the disclosure of documents, attempting to * force the other party to reveal potentially detrimental documents. Discovery disputes: Following a request for discovery of documentary evidence, the other party disputes 15 the request and calls upon the judge to decide the issue. 16 Request for oral hearing or trial: Plaintiff applies for the date(s) for the oral hearing or trial. Pre-trial conference aimed at preparing for trial: The judge meets with parties to make practical 17 arrangements for the trial (for example, the number of witnesses parties intend to call on during trial, how much time each party is given to present oral arguments etc.). * List of (expert) witnesses: The parties file a list of (expert) witnesses with the court. (see assumption 6-a) Summoning of (expert) witnesses: The court summons (expert) witnesses to appear in court for the oral 18 hearing or trial. (see assumption 6-a) Adjournments: Court proceedings are delayed because one or both parties request and obtain an 19 adjournment to prepare for the oral hearing or trial. Trial (prevalent in common law): The parties argue the merits of the case at (an) oral session(s) before the 20 court. Witnesses and expert witnesses are questioned and cross-examined during trial. Adjournments: Court proceedings are delayed because one or both parties request and obtain an 21 adjournment during the oral hearing or trial, resulting in an additional or later trial or hearing date. Request for closing of the evidence period: Plaintiff or Defendant requests the judge to close the evidence * period. Doing Business 2014 Bahamas, The 87 No. Procedure Order for submission of final arguments: The judge sets the deadline for the submission of final factual 22 and legal arguments. Final arguments: The parties present their final factual and legal arguments to the court either by oral * presentation or by a written submission. 23 Judgment date: The judge sets a date for delivery of the judgment. 24 Notification of judgment in court: The parties are notified of the judgment at a court hearing. 25 Writing of judgment: The judge produces a written copy of the judgment. Registration of judgment: The court office registers the judgment after receiving a written copy of the 26 judgment. Court notification of availability of the written judgment: The court notifies the parties that the written 27 judgment is available at the courthouse. 28 Plaintiff's receipt of a copy of written judgment: Plaintiff receives a copy of the written judgment. Notification of Defendant of judgment: Plaintiff or court formally notifies the Defendant of the judgment. 29 The appeal period starts to run the day the Defendant is formally notified of the judgment. Appeal period: By law, Defendant has the opportunity to appeal the judgment during a period specified in 30 the law. Defendant decides not to appeal. Judgment becomes final the day the appeal period ends. Reimbursement by Defendant of Plaintiff's court fees: The judgment obliges Defendant to reimburse 31 Plaintiff for the court fees Plaintiff has advanced, because Defendant has lost the case. Enforcement of judgment: Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be represented * by a lawyer during the enforcement of judgment phase. Plaintiff's approaching of court enforcement officer or (private) bailiff to enforce the judgment: To enforce 32 the judgment, Plaintiff approaches a court enforcement officer such as a court bailiff or sheriff, or a private bailiff. Plaintiff’s request for enforcement order: Plaintiff applies to the court to obtain the enforcement order * ('seal' on judgment). Plaintiff’s advancement of enforcement fees: Plaintiff pays the fees related to the enforcement of the 33 judgment. Attachment of enforcement order to judgment: The judge attaches the enforcement order (‘seal’) to the 34 judgment. Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer * or a (private) bailiff. Plaintiff’s request for physical enforcement: As Plaintiff fears that Defendant might physically resist the * attachment of its movable goods, Plaintiff addresses a request to the judge or to the police authorities to obtain police assistance during the attachment of Defendant's movable goods. Doing Business 2014 Bahamas, The 88 No. Procedure Judge's order for physical enforcement: The judge orders the police to assist with the physical 35 enforcement of the attachment of Defendant's movable goods. Request to Defendant to comply voluntarily with judgment: Plaintiff, a court enforcement officer or a 36 (private) bailiff requests Defendant to voluntarily comply with the judgment, giving Defendant a last chance to comply voluntarily with the judgment. Identification of Defendant's assets for attachment by court official or Defendant: Judge, a court 37 enforcement officer, a (private) bailiff or the Defendant himself identifies Defendant's movable assets for attachment. Plaintiff’s identification of Defendant's assets for attachment: Plaintiff identifies Defendant's assets for 38 attachment. Notification of intent to attach: A court enforcement officer or (private) bailiff notifies other creditors of 39 the intent to attach Defendant's goods. Attachment: Defendant’s movable goods are attached (physically or by registering, marking or separati ng 40 assets). Report on execution of attachment: A court enforcement officer or private process server delivers a report 41 on the attachment of Defendant's movable goods to the judge. Valuation or appraisal of attached movable goods: The court or court appointed valuation expert 42 evaluates the attached goods. Enforcement disputes before court: The enforcement of the judgment is delayed because Defendant 43 opposes aspects of the enforcement process before the judge. Call for public auction: The judge calls a public auction by, for example, advertising or publication in the 44 newspapers. 45 Sale through public auction: The Defendant’s movable property is sold at public auction. 46 Judge's decision on bids: The judge determines the adequacy of the bids presented at public auction. Distribution of proceeds: The proceeds of the public auction are distributed to various creditors (including 47 Plaintiff), according to the rules of priority. Reimbursement of Plaintiff’s enforcement fees: Defendant reimburses Plaintiff's enforcement fees which 48 Plaintiff had advanced previously. 49 Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff. * Not counted in the total number of procedures. Source: Doing Business database. Doing Business 2014 Bahamas, The 89 RESOLVING INSOLVENCY A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY ensuring the survival of economically efficient companies and reallocating the resources of INDICATORS MEASURE inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of Time required to recover debt (years) businesses to normal operation and increase Measured in calendar years returns to creditors. By improving the expectations of creditors and debtors about the outcome of Appeals and requests for extension are insolvency proceedings, well-functioning included insolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’s save more viable businesses and thereby improve estate) growth and sustainability in the economy overall. Measured as percentage of estate value What do the indicators cover? Court fees Doing Business studies the time, cost and outcome Fees of insolvency administrators of insolvency proceedings involving domestic entities. It does not measure insolvency Lawyers’ fees proceedings of individuals and financial Assessors’ and auctioneers’ fees institutions. The data are derived from survey Other related fees responses by local insolvency practitioners and verified through a study of laws and regulations as Outcome well as public information on bankruptcy systems. Whether business continues operating as a The ranking on the ease of resolving insolvency is going concern or business assets are sold based on the recovery rate, which is recorded as piecemeal cents on the dollar recouped by creditors through Recovery rate for creditors (cents on the reorganization, liquidation or debt enforcement dollar) (foreclosure) proceedings. The recovery rate is a Measures the cents on the dollar recovered function of time, cost and other factors, such as by creditors lending rate and the likelihood of the company continuing to operate. Present value of debt recovered To make the data comparable across economies, Official costs of the insolvency proceedings Doing Business uses several assumptions about the are deducted business and the case. It assumes that the Depreciation of furniture is taken into company: account  Is a domestically owned, limited liability Outcome for the business (survival or not) company operating a hotel. affects the maximum value that can be recovered  Operates in the economy’s largest business city.  Has 201 employees, 1 main secured  Has a higher value as a going concern—and creditor and 50 unsecured creditors. the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation. Doing Business 2014 Bahamas, The 90 RESOLVING INSOLVENCY Where does the economy stand today? Speed, low costs and continuation of viable businesses concern. The average recovery rate is 63.5 cents on the characterize the top-performing economies. How dollar. efficient are insolvency proceedings in Bahamas, The? Globally, Bahamas, The stands at 32 in the ranking of According to data collected by Doing Business, 189 economies on the ease of resolving insolvency resolving insolvency takes 3.0 years on average and (figure 11.1). The rankings for comparator economies costs 12% of the debtor’s estate, with the most likely and the regional average ranking provide other useful outcome being that the company will be sold as going benchmarks for assessing the efficiency of insolvency proceedings in Bahamas, The. Figure 11.1 How Bahamas, The and comparator economies rank on the ease of resolving insolvency Source: Doing Business database. Doing Business 2014 Bahamas, The 91 RESOLVING INSOLVENCY What are the changes over time? The benchmarks provided by the economies that over possible in improving the efficiency of insolvency time have had the best performance regionally or proceedings. And changes in regional averages can globally on the time or cost of insolvency proceedings show where Bahamas, The is keeping up—and where it or on the recovery rate (figure 11.2) help show what is is falling behind. Figure 11.2 Has resolving insolvency become easier over time? Time (years) Cost (% of estate) Doing Business 2014 Bahamas, The 92 RESOLVING INSOLVENCY Recovery rate (cents on the dollar) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. “No practice” indicates that in each of the previous 5 years the economy had no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for “no practice” economies is 0. Regional averages on time and cost exclude economies with a “no practice” mark. Source: Doing Business database. Doing Business 2014 Bahamas, The 93 RESOLVING INSOLVENCY A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have companies that are financially distressed but been aimed at helping more of the viable businesses economically viable from inefficient companies that survive. What insolvency reforms has Doing Business should be liquidated. But in some insolvency systems recorded in Bahamas, The (table 11.1)? even viable businesses are liquidated. This is starting to Table 11.1 How has Bahamas, The made resolving insolvency easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. The Bahamas enhanced its insolvency process by implementing rules for the remuneration of liquidators, DB2014 allowing voluntary liquidations and outlining clawback provisions for suspect transactions. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Bahamas, The 94 EMPLOYING WORKERS Doing Business measures flexibility in the regulation of employing workers methodology proposed by the employment, specifically as it affects the hiring and consultative group are available on the Doing Business redundancy of workers and the rigidity of working website (http://www.doingbusiness.org). The data on hours. Over the period from 2007 to 2011 employing workers are based on a detailed survey of improvements were made to align the methodology employment regulations that is completed by local for the employing workers indicators with the letter lawyers and public officials. Employment laws and and spirit of the International Labour Organization regulations as well as secondary sources are reviewed (ILO) conventions. Only 4 of the 188 ILO conventions to ensure accuracy. cover areas measured by Doing Business: employee To make the data comparable across economies, termination, weekend work, holiday with pay and night several assumptions about the worker and the work. The Doing Business methodology is fully business are used. consistent with these 4 conventions. The ILO conventions covering areas related to the Employing The worker: Workers indicators do not include the ILO core labor  Earns a salary plus benefits equal to the standards—8 conventions covering the right to economy’s average wage during the entire collective bargaining, the elimination of forced labor, period of his employment. the abolition of child labor and equitable treatment in  Has a pay period that is the most common for workers in the economy. employment practices.  Is a lawful citizen who belongs to the same race and religion as the majority of the Between 2009 and 2011 the World Bank Group worked economy’s population. with a consultative group—including labor lawyers,  Resides in the economy’s largest business city. employer and employee representatives, and experts  Is not a member of a labor union, unless from the ILO, OECD, civil society and the private membership is mandatory. sector—to review the employing workers methodology and explore future areas of research. A i The business:  Is a limited liability company. full report with the conclusions of the consultative  Operates in the economy’s largest business group is available at city. http://www.doingbusiness.org/methodology/employin  Is 100% domestically owned. g-workers.  Operates in the manufacturing sector.  Has 60 employees. This year Doing Business continued research collecting  Is subject to collective bargaining agreements additional data on regulations covering the in economies where such agreements cover probationary period for new employees. more than half the manufacturing sector and apply even to firms not party to them. Doing Business 2014 presents the data on the  Abides by every law and regulation but does not grant workers more benefits than employing workers indicators in an annex. The report mandated by law, regulation or (if applicable) does not present rankings of economies on the collective bargaining agreement. employing workers indicators nor include the topic in the aggregate ranking on the ease of doing business. Detailed data collected on labor regulations and the Doing Business 2014 Bahamas, The 95 EMPLOYING WORKERS What do some of the data show? One of the employing workers indicators is the worker in his or her first job. Doing Business data show difficulty of hiring index. This measure assesses, among the trend in the minimum wage applied by Bahamas, other things, the minimum wage for a 19-year-old The (figure 12.1). Figure 12.1 Has the minimum wage for a 19-year-old worker or an apprentice increased over time? Minimum wage (US$ per month) Note: A horizontal line along the x-axis of the figure indicates that the economy has no minimum wage. Source: Doing Business database. Doing Business 2014 Bahamas, The 96 EMPLOYING WORKERS Employment laws are needed to protect workers from past 5 years did so in ways that increased labor market arbitrary or unfair treatment and to ensure efficient flexibility. What changes did Bahamas, The adopt that contracting between employers and workers. Many affected the Doing Business indicators on employing economies that changed their labor regulations in the workers (table 12.1)? Table 12.1 What changes did Bahamas, The make in employing workers in 2013? DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Source: Doing Business database. Doing Business 2014 Bahamas, The 97 EMPLOYING WORKERS What are the details? The data on employing workers reported here for lawyers and public officials. Employment laws and Bahamas, The are based on a detailed survey of regulations as well as secondary sources are reviewed employment regulations that is completed by local to ensure accuracy. Rigidity of employment index The rigidity of employment index measures 3 areas of labor regulation: difficulty of hiring, rigidity of hours and difficulty of redundancy. Difficulty of hiring index The difficulty of hiring index measures whether fixed- worker. (The average value added per worker is the term contracts are prohibited for permanent tasks; the ratio of an economy’s gross national income per capita maximum cumulative duration of fixed-term contracts; to the working-age population as a percentage of the and the ratio of the minimum wage for a trainee or total population.) first-time employee to the average value added per Difficulty of hiring index Data Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) The law is silent - no limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage for a 19-year old worker or an apprentice (US$/month) 693.3 Ratio of minimum wage to value added per worker 0.26 Source: Doing Business database. Doing Business 2014 Bahamas, The 98 EMPLOYING WORKERS Rigidity of hours index The rigidity of hours index has 5 components: whether respond to a seasonal increase in production; and there are restrictions on night work; whether there are whether the average paid annual leave for a worker restrictions on weekly holiday work; whether the with 1 year of tenure, a worker with 5 years and a workweek can consist of 5.5 days or is more than 6 worker with 10 years is more than 26 working days or days; whether the workweek can extend to 50 hours or fewer than 15 working days. more (including overtime) for 2 months a year to Rigidity of hours index Data 8 hours day – Sect 8 (1) EA 2001, subject of the averaging provisions of Standard workday in manufacturing (hours) sect. 8 (2) EA 2001 for employees that are not in managerial positions 50-hour workweek allowed for 2 months a year in case of a seasonal Yes increase in production? Maximum working days per week 6.0 Premium for night work (% of hourly pay) in case of continuous 0% operations Premium for work on weekly rest day (% of hourly pay) in case of 0% continuous operations Major restrictions on night work in case of continuous operations? No Major restrictions on weekly holiday in case of continuous operations? No Paid annual leave for a worker with 1 year of tenure (in working days) 10.0 Paid annual leave for a worker with 5 years of tenure (in working days) 10.0 Paid annual leave for a worker with 10 years of tenure (in working days) 15.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 11.7 working days) Source: Doing Business database. Doing Business 2014 Bahamas, The 99 EMPLOYING WORKERS Difficulty of redundancy index The difficulty of redundancy index has 8 components: worker; whether the employer needs approval from a whether redundancy is disallowed as a basis for third party to terminate a group of 9 redundant terminating workers; whether the employer needs to workers; whether the law requires the employer to notify a third party (such as a government agency) to reassign or retrain a worker before making the worker terminate 1 redundant worker; whether the employer redundant; whether priority rules apply for needs to notify a third party to terminate a group of 9 redundancies; and whether priority rules apply for redundant workers; whether the employer needs reemployment. approval from a third party to terminate 1 redundant Difficulty of redundancy index Data Dismissal due to redundancy allowed by law? Yes Third-party notification if 1 worker is dismissed? Yes Third-party approval if 1 worker is dismissed? No Third-party notification if 9 workers are dismissed? Yes Third-party approval if 9 workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Source: Doing Business database. Doing Business 2014 Bahamas, The 100 EMPLOYING WORKERS Redundancy cost The redundancy cost indicator measures the cost of notice requirements and severance payments advance notice requirements, severance payments and applicable to a worker with 1 year of tenure, a worker penalties due when terminating a redundant worker, with 5 years and a worker with 10 years is used to expressed in weeks of salary. The average value of assign the score. Redundancy cost indicator Data Notice period for redundancy dismissal (for a worker with 1 year of tenure, in salary 2.0 weeks) Notice period for redundancy dismissal (for a worker with 5 years of tenure, in 2.0 salary weeks) Notice period for redundancy dismissal (for a worker with 10 years of tenure, in 2.0 salary weeks) Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 2.0 of tenure, in salary weeks) Severance pay for redundancy dismissal (for a worker with 1 year of tenure, in 2.0 salary weeks) Severance pay for redundancy dismissal (for a worker with 5 years of tenure, in 10.0 salary weeks) Severance pay for redundancy dismissal (for a worker with 10 years of tenure, in 20.0 salary weeks) Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 10.7 of tenure, in salary weeks) Source: Doing Business database. Doing Business 2014 Bahamas, The 101 DATA NOTES The indicators presented and analyzed in Doing rounds of verification, leading to revisions or Business measure business regulation and the expansions of the information collected. protection of property rights—and their effect on businesses, especially small and medium-size domestic firms. First, the indicators document the complexity of ECONOMY CHARACTERISTICS regulation, such as the number of procedures to start a business or to register and transfer commercial property. Second, they gauge the time and cost to Gross national income per capita achieve a regulatory goal or comply with regulation, such as the time and cost to enforce a contract, go Doing Business 2014 reports 2012 income per capita through bankruptcy or trade across borders. Third, as published in the World Bank’s World Development they measure the extent of legal protections of Indicators 2013. Income is calculated using the Atlas property, for example, the protections of investors method (current U.S. dollars). For cost indicators against looting by company directors or the range of expressed as a percentage of income per capita, assets that can be used as collateral according to 2012 gross national income (GNI) in U.S. dollars is secured transactions laws. Fourth, a set of indicators used as the denominator. GNI data were not documents the tax burden on businesses. Finally, a set available from the World Bank for Afghanistan, The of data covers different aspects of employment Bahamas, Bahrain, Barbados, Brunei Darussalam, regulation. The 11 sets of indicators measured in Djibouti, the Islamic Republic of Iran, Kuwait, Libya, Doing Business were added over time, and the sample Myanmar, New Zealand, Oman, San Marino, the of economies expanded. Syrian Arab Republic, West Bank and Gaza, and the Republic of Yemen. In these cases GDP or GNP per The data for all sets of indicators in Doing Business 2 capita data and growth rates from other sources, 2014 are for June 2013. such as the International Monetary Fund’s World Economic Outlook database and the Economist Intelligence Unit, were used. Methodology Region and income group The Doing Business data are collected in a standardized way. To start, the Doing Business team, Doing Business uses the World Bank regional and with academic advisers, designs a questionnaire. The income group classifications, available at questionnaire uses a simple business case to ensure http://data.worldbank.org/about/country- classifications. The World Bank does not assign comparability across economies and over time—with regional classifications to high-income economies. assumptions about the legal form of the business, its For the purpose of the Doing Business report, high- size, its location and the nature of its operations. income OECD economies are assigned the “regional” Questionnaires are administered to more than 10,200 classification OECD high income. Figures and tables local experts, including lawyers, business consultants, presenting regional averages include economies accountants, freight forwarders, government officials from all income groups (low, lower middle, upper and other professionals routinely administering or middle and high income). advising on legal and regulatory requirements (table Population 21.2). These experts have several rounds of interaction with the Doing Business team, involving conference Doing Business 2014 reports midyear 2012 calls, written correspondence and visits by the team. population statistics as published in World For Doing Business 2014 team members visited 33 Development Indicators 2013. economies to verify data and recruit respondents. The data from questionnaires are subjected to numerous The Doing Business methodology offers several advantages. It is transparent, using factual information about what laws and regulations say and allowing 2 The data for paying taxes refer to January – December 2012. multiple interactions with local respondents to clarify Doing Business 2014 Bahamas, The 102 potential misinterpretations of questions. Having entrepreneurs reported in the World Bank Enterprise representative samples of respondents is not an issue; Surveys or other perception surveys. Doing Business is not a statistical survey, and the texts This year Doing Business completed subnational of the relevant laws and regulations are collected and studies in Colombia, Italy and the city of Hargeisa answers checked for accuracy. The methodology is (Somaliland) and is currently updating indicators in inexpensive and easily replicable, so data can be Egypt, Mexico and Nigeria. Doing Business also collected in a large sample of economies. Because published regional studies for the g7+ and the East standard assumptions are used in the data collection, African Community. The g7+ group is a country- comparisons and benchmarks are valid across owned and country-led global mechanism established economies. Finally, the data not only highlight the in April 2010 to monitor, report and draw attention to extent of specific regulatory obstacles to business but the unique challenges faced by fragile states. The also identify their source and point to what might be member countries included in the report are reformed. Information on the methodology for each Afghanistan, Burundi, the Central African Republic, Doing Business topic can be found on the Doing Chad, the Comoros, the Democratic Republic of Business website at Congo, Côte d’Ivoire, Guinea, Guinea-Bissau, Haiti, http://www.doingbusiness.org/methodology. Liberia, Papua New Guinea, Sierra Leone, the Solomon Islands, South Sudan, Timor-Leste and Togo. Limits to what is measured The subnational studies point to differences in business regulation and its implementation —as well as The Doing Business methodology has 5 limitations that in the pace of regulatory reform—across cities in the should be considered when interpreting the data. First, same economy. For several economies subnational the collected data refer to businesses in the economy’s studies are now periodically updated to measure largest business city (which in some economies differs change over time or to expand geographic coverage from the capital) and may not be representative of to additional cities. This year that is the case for all the regulation in other parts of the economy. To address subnational studies published. this limitation, subnational Doing Business indicators were created (box 21.1). Second, the data often focus on a specific business form—generally a limited liability company (or its legal equivalent) of a specified Changes in what is measured size—and may not be representative of the regulation The methodology for 2 indicator sets—trading across on other businesses, for example, sole proprietorships. borders and paying taxes—was updated this year. For Third, transactions described in a standardized case trading across borders, documents that are required scenario refer to a specific set of issues and may not purely for purposes of preferential treatment are no represent the full set of issues a business encounters. longer included in the list of documents (for example, Fourth, the measures of time involve an element of a certificate of origin if the use is only to qualify for a judgment by the expert respondents. When sources preferential tariff rate under trade agreements). For indicate different estimates, the time indicators paying taxes, the value of fuel taxes is no longer reported in Doing Business represent the median included in the total tax rate because of the difficulty values of several responses given under the of computing these taxes in a consistent way across all assumptions of the standardized case. economies covered. The fuel tax amounts are in most cases very small, and measuring these amounts is Finally, the methodology assumes that a business has often complicated because they depend on fuel full information on what is required and does not consumption. Fuel taxes continue to be counted in the waste time when completing procedures. In practice, number of payments. completing a procedure may take longer if the business lacks information or is unable to follow up In a change involving several indicator sets, the rule promptly. Alternatively, the business may choose to establishing that each procedure must take at least 1 disregard some burdensome procedures. For both day was removed for procedures that can be fully reasons the time delays reported in Doing Business completed online in just a few hours. This change 2014 would differ from the recollection of affects the time indicator for starting a business, Doing Business 2014 Bahamas, The 103 dealing with construction permits and registering with one another, while the distance to frontier property. For procedures that can be fully completed measure benchmarks economies to the frontier in 3 online, the duration is now set at half a day rather than regulatory practice, measuring the absolute distance to a full day. the best performance on each indicator. Both measures can be used for comparisons over time. The threshold for the total tax rate introduced in 2011 When compared across years, the distance to frontier for the purpose of calculating the ranking on the ease measure shows how much the regulatory environment of paying taxes was updated. All economies with a for local entrepreneurs in each economy has changed total tax rate below the threshold (which is calculated over time in absolute terms, while the ease of doing and adjusted on a yearly basis) receive the same business ranking can show only relative change. ranking on the total tax rate indicator. The threshold is not based on any economic theory of an “optimal tax Ease of doing business rate” that minimizes distortions or maximizes efficiency The ease of doing business index ranks economies in the tax system of an economy overall. Instead, it is from 1 to 189. For each economy the ranking is mainly empirical in nature, set at the lower end of the calculated as the simple average of the percentile distribution of tax rates levied on medium-size rankings on each of the 10 topics included in the index enterprises in the manufacturing sector as observed in Doing Business 2014: starting a business, dealing through the paying taxes indicators. This reduces the with construction permits, getting electricity, bias in the indicators toward economies that do not registering property, getting credit, protecting need to levy significant taxes on companies like the investors, paying taxes, trading across borders, Doing Business standardized case study company enforcing contracts, and resolving insolvency. The because they raise public revenue in other ways—for employing workers indicators are not included in this example, through taxes on foreign companies, through year’s aggregate ease of doing business ranking. taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of Construction of the ease of doing business index the methodology). This year the threshold is 25,5%. Here is one example of how the ease of doing business index is constructed. In Denmark it takes 4 procedures, 5.5 days and 0.2% of annual income per capita in fees Data challenges and revisions to open a business. The minimum capital requirement Most laws and regulations underlying the Doing is 24% of annual income per capita. On these 4 Business data are available on the Doing Business indicators Denmark ranks in the 12th, 11th, 1st and website at http://www.doingbusiness.org. All the 79th percentiles. So on average Denmark ranks in the sample questionnaires and the details underlying the 25th percentile on the ease of starting a business. It indicators are also published on the website. Questions ranks in the 21st percentile on getting credit, 19th on the methodology and challenges to data can be percentile on paying taxes, 27th percentile on submitted through the website’s “Ask a Question” enforcing contracts, 5th percentile on resolving function at http://www.doingbusiness.org. insolvency and so on. Higher rankings indicate simpler regulation and stronger protection of property rights. Ease of doing business and distance to The simple average of Denmark’s percentile rankings frontier on all topics is 17th. When all economies are ordered Doing Business 2014 presents results for 2 aggregate by their average percentile rankings, Denmark stands measures: the aggregate ranking on the ease of doing at 5 in the aggregate ranking on the ease of doing business and the distance to frontier measure. The business. ease of doing business ranking compares economies More complex aggregation methods—such as 3 For getting electricity the rule that each procedure must take a principal components and unobserved components— minimum of 1 day still applies because in practice there are no yield a ranking nearly identical to the simple average cases in which procedures can be fully completed online in less than a day. For example, even though in some cases it is possible to apply for an electricity connection online, additional requirements mean that the process cannot be completed in less than 1 day. Doing Business 2014 Bahamas, The 104 4 used by Doing Business. Thus, Doing Business uses 58 on enforcing contracts, 116 on dealing with the simplest method: weighting all topics equally and, construction permits and 145 on getting electricity. within each topic, giving equal weight to each of the Variation in performance across the indicator sets is topic components. not at all unusual. It reflects differences in the degree If an economy has no laws or regulations covering a of priority that government authorities give to specific area—for example, insolvency—it receives a particular areas of business regulation reform and the “no practice” mark. Similarly, an economy receives a ability of different government agencies to deliver “no practice” or “not possible” mark if regulation exists tangible results in their area of responsibility. but is never used in practice or if a competing Distance to frontier measure regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the A drawback of the ease of doing business ranking is ranking on the relevant indicator. that it can measure the regulatory performance of economies only relative to the performance of others. The ease of doing business index is limited in scope. It It does not provide information on how the absolute does not account for an economy’s proximity to large quality of the regulatory environment is improving markets, the quality of its infrastructure services (other over time. Nor does it provide information on how than services related to trading across borders and large the gaps are between economies at a single getting electricity), the strength of its financial system, point in time. the security of property from theft and looting, macroeconomic conditions or the strength of The distance to frontier measure is designed to underlying institutions. address both shortcomings, complementing the ease of doing business ranking. This measure illustrates the Variability of economies’ rankings across topics distance of an economy to the “frontier,” and the Each indicator set measures a different aspect of the change in the measure over time shows the extent to business regulatory environment. The rankings of an which the economy has closed this gap. The frontier is economy can vary, sometimes significantly, across a score derived from the most efficient practice or indicator sets. The average correlation coefficient highest score achieved on each of the component between the 10 indicator sets included in the indicators in 10 Doing Business indicator sets aggregate ranking is 0.38, and the coefficients (excluding the employing workers indicators) by any between any 2 sets of indicators range from 0.18 economy. In starting a business, for example, Canada (between getting electricity and getting credit) to 0.58 and New Zealand have achieved the highest (between trading across borders and resolving performance on the number of procedures required (1) insolvency and between trading across borders and and on the time (0.5 days), Denmark and Slovenia on getting electricity). These correlations suggest that the cost (0% of income per capita) and Chile, Zambia economies rarely score universally well or universally and 99 other economies on the paid-in minimum badly on the indicators. capital requirement (0% of income per capita) (table 22.2). Consider the example of Canada. It stands at 19 in the aggregate ranking on the ease of doing business. Its Calculating the distance to frontier for each economy ranking is 2 on starting a business, 4 on protecting involves 2 main steps. First, individual indicator scores investors, and 8 on paying taxes. But its ranking is only are normalized to a common unit: except for the total tax rate, each of the 31 component indicators y is rescaled to (max − y)/(max − min), with the minimum 4 See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita Ramalho, “Doing Business Indicators: Why Aggregate, and How to value (min) representing the frontier—the highest Do It” (World Bank, Washington, DC, 2005). Principal components performance on that indicator across all economies and unobserved components methods yield a ranking nearly since 2003 or the first year the indicator was collected. 5 identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the For the total tax rate, consistent with the calculation of pairwise correlations among indicators do not differ much. An alternative to the simple average method is to give different weights to the topics, depending on which are considered of more or less 5 Even though scores for the distance to frontier are calculated from importance in the context of a specific economy. 2005, data from as early as 2003 are used to define the frontier Doing Business 2014 Bahamas, The 105 the rankings, the frontier is defined as the total tax rate Economies that improved the most across 3 or at the 15th percentile of the overall distribution of more Doing Business topics in 2012/13 total tax rates for all years. Second, for each economy Doing Business 2014 uses a simple method to calculate the scores obtained for individual indicators are which economies improved the most in the ease of aggregated through simple averaging into one doing business. First, it selects the economies that in distance to frontier score, first for each topic and then 2012/13 implemented regulatory reforms making it across all topics. An economy’s distance to frontier is easier to do business in 3 or more of the 10 topics indicated on a scale from 0 to 100, where 0 represents included in this year’s ease of doing business ranking. 6 the lowest performance and 100 the frontier. Twenty-nine economies meet this criterion: Azerbaijan, The maximum (max) and minimum (min) observed Belarus, Burundi, Côte d’Ivoire, Croatia, Djibouti, values are computed for all economies included in the Gabon, Guatemala, Guinea, Italy, Kosovo, Latvia, the Doing Business sample since 2003 and for all years former Yugoslav Republic of Macedonia, Malaysia, (from 2003 to 2013). To mitigate the effects of extreme Mauritius, Mexico, Moldova, Mongolia, Morocco, outliers in the distributions of the rescaled data (very Panama, the Philippines, the Republic of Congo, few economies need 694 days to complete the Romania, the Russian Federation, Rwanda, Sri Lanka, procedures to start a business, but many need 9 days), Ukraine, Uzbekistan and the United Arab Emirates. th the maximum (max) is defined as the 95 percentile of Second, Doing Business sorts these economies on the the pooled data for all economies and all years for increase in their distance to frontier measure from the each indicator. The exceptions are the getting credit, previous year using comparable data. protecting investors and resolving insolvency Selecting the economies that implemented regulatory indicators, whose construction precludes outliers. In reforms in at least 3 topics and improved the most in addition, the cost to export and cost to import for each the distance to frontier measure is intended to year are divided by the GDP deflator, so as to take the highlight economies with ongoing, broadbased reform general price level into account when benchmarking programs. The criterion for identifying the top these absolute-cost indicators across economies with improvers was changed from last year. The different inflation trends. The base year for the deflator improvement in ease of doing business ranking is no is 2013 for all economies. longer used. The improvement in the distance to The difference between an economy’s distance to frontier measure is used instead because under this frontier score in any previous year and its score in measure economies are sorted according to their abs- 2013 illustrates the extent to which the economy has olute improvement instead of relative improvement. closed the gap to the frontier over time. And in any given year the score measures how far an economy is from the highest performance at that time. Take Colombia, which has a score of 70.5 on the distance to frontier measure for 2014. This score indicates that the economy is 29.5 percentage points away from the frontier constructed from the best performances across all economies and all years. Colombia was further from the frontier in 2009, with a score of 66.2. The difference between the scores shows an improvement over time. The distance to frontier measure can also be used for comparisons across economies in the same year, complementing the ease of doing business ranking. For example, Colombia stands at 63 this year in the ease of doing business ranking, while Peru, which is 6 Doing Business reforms making it more difficult to do business are 29.3 percentage points from the frontier, stands at 42. subtracted from the total number of those making it easier to do business. Doing Business 2014 Bahamas, The 107 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Doing Business reforms News on the Doing Business project Short summaries of DB2014 business regulation http://www.doingbusiness.org reforms, lists of reforms since DB2008 and a ranking simulation tool Rankings http://www.doingbusiness.org/reforms/ How economies rank—from 1 to 189 http://www.doingbusiness.org/rankings/ Historical data Customized data sets since DB2004 Data http://www.doingbusiness.org/custom-query/ All the data for 189 economies—topic rankings, indicator values, lists of regulatory procedures and Law library details underlying indicators Online collection of business laws and regulations http://www.doingbusiness.org/data/ relating to business and gender issues http://www.doingbusiness.org/law-library/ Reports http://wbl.worldbank.org/ Access to Doing Business reports as well as subnational and regional reports, reform case Contributors studies and customized economy and regional More than 10,200 specialists in 189 economies profiles who participate in Doing Business http://www.doingbusiness.org/reports/ http://www.doingbusiness.org/contributors/doing- business/ Methodology The methodologies and research papers Entrepreneurship data underlying Doing Business Data on business density for 139 economies http://www.doingbusiness.org/methodology/ http://www.doingbusiness.org/data/exploretopics/e ntrepreneurship Research Abstracts of papers on Doing Business topics and Doing Business iPhone App related policy issues Doing Business at a Glance App presents the full http://www.doingbusiness.org/research/ report, rankings and highlights http://www.doingbusiness.org/specialfeatures/ iphone Doing Business 2014 Bahamas, The 108