Concerned that regulations hurt small businesses

| 20/10/2016

Can you tell me what government/immigration and the Trade and Business Licensing Department are trying to accomplish by changing the regulations in order to apply for a renewal or new Trade and Business Licence with all of the regulations they have now ie police record, bank statement? Do they realise that a lot of small businesses have had to close down because of the new regulations and requirements? Are the larger businesses also required to provide the information that is being asked for? I would not think that the larger companies would give out their bank statements and how would they be able to give out a police record? Then to top it off there is pension, insurance and fees for work permits. Oh boy. Something is not right. Can someone fix this issue so that the small business can reopen again?

Auntie’s answer: You have asked many questions and I will try to get through them one by one (but not necessarily in order). I realise my answer will be much longer than usual but I had a lot of information to get through, so I hope everyone can bear with me.

First of all, I want to point out that I think you mean the Trade and Business Licensing Board, not department, which is responsible for issuing licences and and which falls under the remit of the Department of Commerce and Investment (DCI).

For the rest of your questions, I asked DCI and an official with that department addressed your concerns. The requirements referred to are found in the Trade and Business Licensing Law, 2014.

The first point he wanted to make was that the requirements are different for an individual seeking a business licence as a sole trader than for a registered company.

“For example, John Brown being listed as John Brown/TA John’s General Maintenance & Repairs is different from being registered as John’s General Maintenance & Repairs Ltd. The requirements are based solely on that choice,” he said.

He added that the size of the business does not matter unless you are applying for specific incentives (more on that in a bit).

In addition, all new directors and shareholders are required to provide a police clearance certificate and again this is not based on the size of the business.

“We can also confirm DCI does not require a bank statement for obtaining a business licence. We do require a bank reference for new licence applications only. For the added convenience, police clearance certificates can now be paid for and obtained at DCI for business licensing purposes only,” the official explained.

Just to clarify the point about bank requirements, the bank statement shows items like withdrawals, cheques paid, interest earned and the balance, but DCI “do not want to see your financial transactions”. The reference is all about the relationship the applicant has with the bank, which confirms the person in question is a longstanding customer who has maintained a good working relationship with the institution over however many years.

Now, about the incentives: The size of a business only matters when obtaining a discount on licensing fees, the official said, explaining that since August 2014, the government has offered an incentive only to micro- and small-business owners. The former is classified as not employing more than five people, excluding the owner, with annual gross revenue not more than $250,000. Licensing fees for these businesses are waived up to 100%.

A small business does not employ more than 12 persons with annual gross revenue not exceeding $750,000. Licensing fees are waived up to 75% for a small business. There is no limit to the number of businesses per owner for these discounts to apply.

On the issue of work permit fees, the official said these are “optional” for business owners, meaning that they can avoid those costs by hiring “local talent”, and that legal requirements for pension and health insurance should not be new to them. He added that the 2014 law aims to have more businesses comply with those requirements.

“Generating better compliance with health and pension provisions not only ensures employees are properly treated but boosts local commerce by creating a level playing field, and therefore fair competition, for businesses in the Cayman Islands,” he said.

I have one more question to deal with and hope I haven’t lost too many readers at this point. Concern was raised about many small businesses having to close down. Here is what the DCI official said, “Over the last two years there has been a 7% increase each year in the number of business licences issued. Furthermore, over 2,000 businesses have taken advantage of the incentive programme to date,” adding that based on the department’s records there has been “no substantial increase in business closures since the new law came into effect”.

The law mentioned in this column can be found on the CNS Library.


Category: Ask Auntie

Comments (1)

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  1. Anonymous says:

    WOW that was very informative. I thank you very much for taking the time to answer all my questions, which was some what different then what I have told.

    Thanks again now I can open up my business again.