The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is “well past the expiry date” for naming its Value-Added Tax (VAT) Comptroller, amid warnings that both the post and office holder are “super critical” to eliminating all remaining uncertainties surrounding the new tax.

Gowon Bowe, the Coalition for Responsible Taxation’s co-chairman, told Tribune Business that the Comptroller was central to the Government’s chosen approach for dealing with all outstanding VAT-related matters.

Rather than amend the VAT Act, and all that would entail in terms of going back to Parliament, Mr Bowe said the Christie administration had decided to use ‘VAT Rules’ to clarify all lingering uncertainties.

Yet the power to write and issue so-called VAT Rules, as pointed out by Tribune Business last week, is placed solely in the hands of the as-yet unappointed Comptroller by the legislation - a factor that could potentially short-circuit the Government’s plans.

“Given the stance of the Ministry of Finance, that a lot of things will be dealt with in the rules, it is past - well past - the expiry date to have that person announced,” Mr Bowe told Tribune Business.

“That actual role is super critical. What we have seen to-date, both in terms of the issues raised and responses by the Ministry of Finance, is a lot of the uncertainties are going to be dealt with by the VAT Rules.

“Most of the VAT Rules are going to come from the Comptroller. This post is super critical if the Government and Ministry of Finance do not want to amend the law, which we think is a bad choice.”

Mr Bowe told this newspaper that the Coalition, and wider private sector, were opposed to the Government’s ‘clarification’ approach, wanting all such issues to be dealt with in legislation rather than policy/Rules because of the greater confidence and certainty this would foster among businesses and consumers.

He said both the New Zealand tax consultants, who visited the Bahamas last year, and his colleagues at PricewaterhouseCoopers (PwC) in the UK, had informed him that their countries’ VAT laws were the most frequently amended legislation, as the tax was constantly being tweaked.

And Mr Bowe, a PwC (Bahamas) accountant and partner in his day job, said it was “not a great comfort” for John Rolle, the Ministry of Finance’s financial secretary, to say he was currently ‘acting’ as VAT Comptroller.

Mr Rolle made that comment when asked by Tribune Business last week whether the Government, with less than five weeks to go before VAT implementation, had identified this man/woman of mystery.

Mr Bowe said the private sector wanted to hear if Mr Rolle was taking the post permanently, or who would be, adding that its current ‘vacant’ status was likely why few, if any, VAT Rules had been forthcoming.

The Government’s reliance on these Rules mirrors its approach to much legislation, where key issues are either left in the hands of the responsible minister, or covered by policy - not law. Either way, this leaves crucial decisions subject to whim and discretion.

“From the business perspective, we’d like the legislation to be as clear as possible, rather than leaving it to the individual or the VAT Department,” Mr Bowe told Tribune Business.

“It is our recommendation that the VAT legislation, where it lacks clarity or there are different interpretations, that the legislation be amended to clarify it. That would be the wider community choice.”

He added that the so-called ‘guidance notes’, which the Ministry of Finance and VAT Department appeared to be relying on, did not have the support of statute law to back them up.

Mr Bowe said amendments announced via ‘guidance notes’ were, in some instances, causing more confusion than help to the private sector.

He cited one such instance where a ‘guidance note’, permitting entities in the international financial services sector to “opt out” of having to file VAT returns, had “created more confusion than clarity”.

Mr Bowe said the new policy, as announced by the Government, required such entities to register for VAT but, since they would be treated as exporters, and therefore ‘exempt’ or ‘zero rated’, they did not have to file returns.

The Tax Coalition co-chair said this raised immediate questions about the type of entity that would be eligible for the change, whether it would be the private bank, family office or IBC.

“How far reaching is it,” he asked. “It doesn’t seem consistent with the law.”

Otherwise, Mr Bowe said, the VAT Comptroller would be the “crucial element”as his Rules and rulings would “carry the day”.

“That individual is going to have the behemoth task of governing a heretofore indisciplined society in terms of tax compliance,” he told Tribune Business.

“That individual has to be extremely non-political, not come with baggage or preconceived notions, but come with a fair and open mind to consider all circumstances.....

“This role is going to be one that the business community and the Government is going to be relying upon a great deal to ensure compliance in an equitable manner, fair and consistent rulings, and the fortitude and expertise to implement this in a manner consistent with international standards.

“We want to know this individual has the expertise and can be considered an impartial person sitting at the top. We want to know this is a person capable of dealing with this in an orderly manner.”

Mr Bowe said he and the Coalition were not opposed to the VAT Comptroller being an expatriate “in the early stages”, if the necessary expertise and talent did not exist locally or among Bahamians abroad.

Conceding that he was unsure if a person with all the qualities required for the VAT Comptroller existed in the Bahamas, Mr Bowe said it was vital to find the right person to minimise both implementation and operational issues.

“We have to really give very careful consideration to that with the VAT Comptroller,” he added. “It can be a Bahamian based abroad, and who has worked in a tax authority, but it certainly has to be an individual very conversant with VAT and able to put it into play.

“No amount of theoretical expertise, no amount of text books can help you implement in practice now.”

Mr Bowe said it was vital that the VAT Comptroller’s rulings resolved disputes promptly, efficiently and fairly, to avoid both tying up the court system and “silly arguments through lack of expertise”.