By NEIL HARTNELL
Tribune Business Editor
Bahamian businesses have seen “a night and day” improvement in the timeliness of VAT refunds since early 2016, the Chamber of Commerce’s chairman yesterday revealing some had previously been enduring 12-15 month waits.
Gowon Bowe told Tribune Business that while private sector concerns over Value-Added Tax (VAT) refunds were “not completely resolved”, the consistency and speed at which businesses received due payment from the Government had improved.
Acknowledging that delayed refunds negatively impacted cash flow for impacted businesses, Mr Bowe said VAT was now moving out of the “creeping” or “birthing” stage but needed constant attention.
Calling on the Dr Hubert Minnis-led administration to make paying taxes “as easy as possible” by tackling all unresolved VAT matters, the Chamber chairman acknowledged there was merit to complaints by Rupert Roberts, Supervalue’s owner, about the lack of an appeals process.
Mr Roberts complained to Tribune Business yesterday about the absence of a clearly-defined process to challenge Department of Inland Revenue decisions the private sector felt were unfair or unjust, and Mr Bowe said it was now up to this government - and future administrations - to remedy such concerns for the benefit of all.
The Chamber chief agreed that the VAT refund process had seen “challenges”, but said it was ‘normal’ global practice for governments to quickly seize taxes only to delay paying others.
“Persons are saying it’s night and day with the refund process compared to 2016, but there are still challenges,” Mr Bowe told Tribune Business.
“Some businesses will tell you going into 2016 from 2015, they had been waiting for refunds for 12 months, and some, 15 months.”
Mr Bowe said some of the delays, especially those concerning large importers and logistics firms, had resulted from the Department of Inland Revenue and VAT unit insisting that “audits take place before actual amounts are refunded”.
He added that the situation had improved due to better communication from the Department of Inland Revenue, which had become “more effective communicating their concerns before refunds are made”.
Information flows to the private sector from the Department had also become better, and Mr Bowe said of the refund woes: “I think it has improved. I wouldn’t say it is currently completely resolved.
“I’m not sure there is any VAT system in the world where all issues are completely resolved. Governments are quick on revenues and slow to pay. That’s the rule with any government.”
In the Bahamas’ case, the Chamber chairman added: “Certainly, the challenges experienced in the first year of implementation and continuing into last year have been addressed for the most part.
“Some businesses have had the opportunity to offset due VAT refunds against Business License fees or real property taxes.”
Mr Bowe said that while the timeliness of refunds may not have reached a month post-filing, most businesses were now enjoying consistency when it came to obtaining payment from the Government.
“For a business in a constant refund position with the Government, the long waiting period can be an impact to cash flow, and managing cash flow,” he agreed, “but when payment is consistently made within a certain period, they can plan for it.
“Most businesses will say they are in a position where they can plan for cash flow coming back in.”
Mr Bowe said that with VAT now more than two years-old, the Minnis administration will be tasked with ensuring all outstanding matters are resolved so it continues to operate at maximum efficiency.
“The main issue is that we’re two years into a new system, so it’s now moving from the creeping or birthing stage and, like any child you rear, the attention you provide in the early stages is key to ensuring progress,” Mr Bowe told Tribune Business.
“VAT, as a tax system, is through the creeping stage and the Government has to revisit this process and reform things to ensure paying taxes is made as easy as possible.”
Pointing out that government was continuous, Mr Bowe added: “The new administration coming in has simply inherited issues raised with the previous administration that went unanswered.
“From that perspective, if VAT is going to be the key revenue driver and key revenue source, it will be critical for them to pick up the dialogue with the private sector and wider community, and ensure unanswered issues are addressed so the VAT system remains palatable to all parties.”
One unresolved issue, as far as Supervalue’s Mr Roberts is concerned, is the absence of a clear, transparent process for dealing with VAT-related disputes between the Government and private sector.
Mr Bowe noted that such an appeals process was mandated by law through the VAT legislation, but implied that the former government had failed to execute and follow through on this requirement.
“Certainly the legislation makes provision for it,” he said. “However, I don’t think there’s actually been a clear communication as to how it’s actually working.
“One, where is the Tribunal? Two, how is it comprised, and more importantly,how can you access it and bring complaints?”
Agreeing that there was no proper “avenue to raise these challenges”, of the kind outlined by Mr Roberts, the Chamber chairman added: “If the avenue exists, it’s certainly not been well set out.”
Suggesting that the 6,000-plus VAT registrants had taken other steps to safeguard their interests in the absence of an appeals process, Mr Bowe said: “Since VAT’s inception, people have been in the process of bedding down and working through the system, and making sure they’re clear as to lining up their ducks in a row, so that if there’s any dispute they’re coming from a position of strength.”
He added that industries such as construction, retail and insurance had also been heavily involved with the Department of Inland Revenue in working through their own sector-specific issues.