By NEIL HARTNELL
Tribune Business Editor
The Grand Bahama Chamber of Commerce’s president has urged the Government to tackle the “huge inconsistencies” between its Value-Added Tax (VAT) legislation and guidance notes, warning that this was creating “much confusion” in the private sector.
Kevin Seymour called on the Christie administration to work closely with both his organisation and the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) to resolve “the laundry list of issues” that remain outstanding regarding VAT.
Acknowledging that there would be inevitable “quirks” with the roll-out of any new tax regime, Mr Seymour said the Government’s plans to levy VAT on services transactions between Grand Bahama Port Authority (GBPA) licensees remained a “huge” issue for Freeport’s business community.
Apart from breaching the Hawksbill Creek Agreement, Mr Seymour said this aspect of the Government’s VAT plans was “definitely sending the wrong signal” to current and potential Freeport investors.
He warned that levying VAT on business-to-business services transactions in Freeport would further squeeze companies’ cash flow and resources, leaving them “out of pocket” until they could either offset these tax payments or claim refunds.
Urging the Government to abide by the Hawksbill Creek Agreement’s terms when it came to VAT implementation, the newly-elected GB Chamber chief added: “The deal is the deal.”
While the organisation plans to press the Government to reverse its ‘VAT on services in Freeport’ plan, Mr Seymour and the Grand Bahama private sector have not lost sight of the national implications from tax reform.
“There seems to be some huge inconsistencies between the legislation and underlying guidance notes, which appears to be creating a lot of confusion among registrants and potential registrants,” Mr Seymour told Tribune Business.
“While we concede that with any tax regime roll-out you have these quirks, we urge them [the Government] to work closely with the Chamber in Nassau to try and resolve this laundry list of issues and potential issues in terms of operational and implementation-type issues.
“We definitely want to have greater clarity around this, since the Government is forging ahead with this.”
Mr Seymour thus backed the position taken by his Nassau counterpart, BCCEC chairman, Gowon Bowe, who has repeatedly called on the Government to work with the private sector in drawing up a list of all outstanding VAT-related issues, whether they have been resolved and, if not, proposed solutions for doing so.
The two Chamber leaders are also as one on the call for the Government to ‘bridge the gap’ between the VAT Act and its ‘guidance notes’, the private sector wanting any changes to the tax to be done via legislation rather than through the Rules or ‘notes’.
Meanwhile, Mr Seymour and the new GB Chamber Board have also set their sights on plans to levy VAT on services transactions between GBPA licensees.
Their objectives include “lobbying the Government to reverse its decision regarding the imposition of VAT on services traded between GBPA licensees, and generally promote the rights of beneficiaries under the Hawksbill Creek Agreement”.
Describing this as a “huge” issue for Freeport’s private sector, Mr Seymour said: “We believe, on the face of it, that the imposition of VAT on services is in contravention of the terms of the Hawksbill Creek Agreement, from the perspective that any tax assessed runs afoul of it.
“We believe this is definitely sending the wrong signal to current investors on the ground, as well as potential investors. The deal is the deal, and we would expect the Government would abide by it.”
The GB Chamber chief added that even if just for a short period, levying VAT on services transactions would leave GBPA licensees “out of pocket” until they were able to either offset the tax on inputs or claim refunds by virtue of being ‘zero-rated’ for exports.
“With cash resources being tight for most licensees, if we can have a situation where they do not have to put out their funds, that would be most advantageous,” Mr Seymour said.
The ‘VAT on licensee services transactions’ appears a likely target for legal challenge within the Bahamian court system.
While unable to say whether this would happen, should the Government stick to its original position, Mr Seymour suggested such action would be a ‘last resort’ move.
“From a cost and time perspective, that would be the last option chosen,” he told Tribune Business. “We don’t want to be mired in litigation. We want to see things happen quickly on this island.”