The Tribune

By DENISE MAYCOCK

Tribune Freeport Reporter

dmaycock@tribunemedia.net

AS the January 1 implementation date for Value Added Tax draws near, newly-elected Grand Bahama Chamber of Commerce president Kevin Seymour is encouraging businesses on the island to register and conform to the new regime.

Businesses operating in the Bahamas that provide taxable supplies of $100,000 or more are required by law to register for VAT.

However, businesses providing taxable supplies that are below $100,000 are not required to register, but may wish to voluntarily register.

Mr Seymour said all of the information received thus far from the Ministry of Finance suggests that government is prepared to move ahead tomorrow with the implementation of VAT.

“Accordingly, we have been recommending to our members that they register pursuant to the regulation that currently exists so that they are prepared if the government does, in fact, go ahead with the implementation date that they have already announced to the public,” he said.

“If the government at the 11th hour makes a decision, for whatever reason, to defer implementation, still we would prefer to err on the side of caution as opposed to taking a reckless view that they will defer this thing again.”

The business community of Grand Bahama is unique in that it comprises licensees of the Grand Bahama Port Authority and government licensees.

The Chamber president said the 3,000 business licensees who operate businesses in the Port Area/City of Freeport represent the lion’s share on Grand Bahama.

“We are trying to get some good statistics on the government licensees who operate businesses in Eight Mile Rock, West End and East End because it is very important for us,” he said.

Mr Seymour indicated that the GBCC has some issues with some of the regulations and rules as it relates to their members who are licensees of the Port Authority.

One of the biggest, he said, is the question of services between GBPA licensees being VAT-able because the Chamber believes it is contrary to the spirit of the Hawksbill Creek Agreement (HCA).

“Moreover, there are some legal practitioners among the chamber’s membership who suggest that just purely based on the timing of the implementation of VAT, that it might be running afoul of certain provisions of the HCA, namely exemptions for real property tax, business licences and other taxes that are due to expire in August 2015.

“The view they have taken (is not the view of the Chamber because we would like to get a formal opinion on this) is that any implementation of a tax prior to that date would run afoul of those provisions.”

Notwithstanding that, and separate and apart from the legal interpretation, Mr Seymour said the Chamber is of the view that Freeport is intended to be a “free” port and is encouraging government to extend the provisions, due to expire in 2015, through to 2054 when the entire agreement expires.

“We will be actively lobbying government to do that over the next few weeks and months.

“We believe that is going to be necessary, not only for the continued viability of licensees currently on the ground doing business, but also if we are going to have any chance for attracting new investments to GBI, and so that is very high on our agenda at the Chamber,” Mr Seymour said.

The government has engaged McKenzie & Co, an international consulting firm, to provide data with respect to the revenues that would be forgone if they decide to extend the exemptions to 2054.

“Government has made the case to us that they would be prepared to entertain that request if it can be clearly demonstrated … that revenues that will be earned through using the gross approach, not taxes but by increased investment, will be equal to or exceed the potential revenues that they can raise by levying real property tax, business licenses tax and other taxes,” he explained.