Freeport: Further uncertainty over VAT TIN demand

Fears are mounting that Freeport’s commercial environment is being further stifled by a new Customs edict that all Grand Bahama Port Authority (GBPA) licensees must obtain a VAT TIN number.

Carey Leonard, the Callenders & Co attorney, told Tribune Business that the requirement to possess a TIN (Taxpayer Identification Number) was being imposed on businesses that were not even mandatory VAT registrants because their annual turnovers are less than $100,000.

Arguing that this latest Customs demand had “no legal basis”, Mr Leonard said it was causing imported goods to “pile up” at the border and “slowing business down”.

This, he added, was because even GBPA licensees possessing a valid bond were being told they will have to pay Customs Duties and VAT at the border unless they have a TIN.

Mr Leonard suggested that this new bureaucratic impediment amounted to a further attack on GBPA licensee rights under the Hawksbill Creek Agreement, and even described it as “holding the small businessman to ransom”.

“I’ve been approached by some clients who are having problems clearing stuff with Customs on the basis that they’re required to have a [VAT] TIN,” Mr Leonard told Tribune Business.

“I can’t find any legal basis for this.”

Companies throughout the Bahamas with annual turnovers of less than $100,000 are not required to register for VAT. They neither charge it to their customers, nor collect it for the Government, and therefore do not need to obtain a VAT TIN.

But Mr Leonard said other Freeport-based attorneys had confirmed in conversation with him that Customs was indeed enforcing the TIN requirement on all businesses - even those below the VAT registration threshold.

Companies were being told they had to apply to the VAT Unit for their TIN, which was ultimately issued by the Ministry of Finance once approved.

Mr Leonard added that his own inquiries with Customs, while inconclusive to-date, suggested that his understanding of the TIN policy was correct, and that it was being enforced from Nassau.

“There seems to be no legal basis for this, and they’ve got quite a bit of stuff piling up at Customs,” he told Tribune Business. “It’s slowing businesses down.

“The ones it really hits are the small businessmen. The small guy is being hit with more paperwork, yet the whole objective of this $100,000 threshold was to ensure they were not being overburdened.

“They are now being required to do exactly that,” Mr Leonard added. “It’s prejudicial. A number of them are having to wait days and weeks to get a [TIN] number.

“The way I interpret it is that the small businessman is being held to ransom by the Government. Either you do this or are being put out of business.”

Companies without a TIN are either being forced to leave imports with Customs until they get one, disrupting the normal flow of commerce, or paying duties/VAT at the border on ‘bonded’ inventory.

John Rolle, the acting VAT comptroller, could not be reached for comment before press time despite several messages being left for him.

Kevin Seymour, the Grand Bahama Chamber of Commerce’s president, declined to comment on the issue when contacted by Tribune Business.

However, this newspaper understands that Chamber representatives have met with Freeport-based Customs officials over the ‘TIN requirement’, and are now awaiting a response to their concerns.

Meanwhile, Fred Smith QC warned that he would unleash another Judicial Review action against Customs in the Supreme Court if it was pursuing this policy.

“Rest assured that if this is going on we will be issuing Judicial Review proceedings against Customs to stop this perversion of the Hawksbill Creek Agreement,” the Callenders & Co partner told Tribune Business.

“Customs and the Government seem hell-bent on breaking the Hawksbill Creek Agreement, and the exemption from Customs duties is the one benefit that continues until 2054.”

Mr Smith said the ‘TIN requirement’ would only further unsettle Freeport’s uncertain business climate, and potentially deter more investment into the city.

“It is apparent by this repeat performance of Customs to frustrate and breach the agreement why licensees have to keep fighting year in, year out, to protect their rights,” he said.

“No one will want to invest in Freeport. It’s an investment in litigation, not in business. It’s an investment in uncertainty, not in business. It’s an investment in arbitrary government dictates, not business. It’s not worth investing in Freeport.”


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