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Business owners outraged over CR fee rise

Bahrain News
Fri, 18 Aug 2017
By Sandeep Singh Grewal
1 of 4

OUTRAGED business owners are attempting to renew their commercial registrations (CR) by next month in a bid to avoid paying exorbitant new fees.

Annual levies on CRs have been significantly increased with some business categories, such as construction and industrial, facing a 20-fold increase from September 22.

In addition to the increase in fees, business owners will also have to pay separate taxes for each business activity added to the CR such as import of food or tobacco products, manufacturing, building maintenance, manpower supply and consultancy services.

The Industry, Commerce and Tourism Ministry posted a notice on Sijilat – the online commercial registration portal – for firms to “delete unrequired/unnecessary activities” associated with their CR to avoid paying additional activity fees.

However, traders told the GDN the fees should have been introduced gradually and based on the size and nature of companies.

It comes a day after the Bahrain Chamber of Commerce and Industry (BCCI) requested His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa to reverse the decision, warning that many small and medium enterprises “might go bankrupt or exit the market”.

“CR owners used to pay BD50 at the time of renewal every year and had many business activities associated with it,” said BCCI coffee shops and restaurants head Ahmed Al Saloom.

“The ministry has now allocated separate fees for different activities under each CR, in addition to the BD50.”

He cited an example of how a cold store owner who paid BD50 a year will now have to pay a minimum of BD300 for commercial activities fee, in addition to other charges to engage in other activities such as selling tobacco and certain food products.

“They are charging us for each activity under a CR,” added Mr Al Saloom.

“One cannot operate by simply paying BD50 as a basic fee that does not entitle to operate in business activities until we apply for them.”

These levies are in addition to fees collected by other licensing bodies such as the Health Ministry, and the Works, Municipalities Affairs and Urban Planning Ministry.

The increased fees appeared in the Official Gazette in September last year and specified fee categories concerning nine types of CRs – ranging between BD25 for small businesses and BD1,000 for industrial, construction and real estate activities.

“All the ministries are now racing towards increasing fees for their services,” said Mr Al Saloom.

“We will lose our position as a business-friendly country, as the cost of doing business has gone up.”

Mr Saloom also urged companies and individuals to renew their CRs before the new fees come into effect from next month.

“Businessmen can renew their CR at least six months before its expiry, and pay the old fees instead of the new charges,” he explained.

“They can get at least a one-year grace period and start paying the new fees from next year.

“Companies should also check their CR details and delete any activity they don’t want to pay extra for.”

Meanwhile, GCC Gold and Jewellery Association Bahrain Chapter chairman Sajid Shaikh said wholesale business was down 40 per cent this year – adding that the new fee rise would worsen the situation.

“The question is not to restructure existing fees, but develop the market to attract foreign direct investment and tourism,” he said.

“Cost of living and doing business in Bahrain has gone up in recent times with new fees being increased by different government bodies.

“Also, when we questioned the officials about (the sudden) increase, they said it was published in the Official Gazette last year.

“Who reads the Official Gazette in the country to know about such details, especially the SMEs.”

Mr Shaikh, who is also chairman of BCCI’s Bahrain Asian Traders Committee, said the ministry should hold consultation meetings with the business community before imposing any new taxes.

“This is a free market that has built confidence among international investors, but introducing new fees for businesses is not the solution,” he added.

BCCI board member Ahlam Janahi also said that any fee rise should have been introduced gradually with consultation with different stakeholders.

“There needs to be studies conducted to understand the impact on the market especially as more than 92pc of the market consists of SMEs,” she said.

“I don’t think it’s right to have separate fees for each activity under a CR.”

Scores of small-sized traders located in the capital have also raised concerns that the new fees could make it difficult to stay afloat as business was already slow.

“The future of doing business in Bahrain will become a big question mark if these fees are not stopped,” said Old Manama Suq Traders Committee chairman Mahmood Al Namlaiti.

“There are hardly tourists and visitors in the suq because of summer months, which means business has been slow for the past three months.”

The heads of seven different business associations yesterday sent a letter to the Premier opposing the new CR fees.

They were Bahrain Contractors Society, Bahrain Real Estate Association, Bahrain Small and Medium Enterprises Development Society, Bahrain Businesswomen’s Society, Bahrain Businessmen’s Association, GCC Gold and Jewellery Association Bahrain Chapter, and Bahrain Business and Professional Women International Federation.

The GDN reported on August 8 that some construction firms in Bahrain were attempting to bypass a 20-fold increase in the annual fee by changing their commercial registrations.

They were urged to switch their CRs from ‘construction’ to ‘building maintenance’ in order to avoid paying BD1,000, an increase from the annualBD50.

There are more than 90,000 CRs listed in the ministry’s database.

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