By NEIL HARTNELL
Tribune Business Editor
The attorney general will “reach out” to Wayne Munroe QC today to find out why his web shop clients are not paying the taxes agreed under the government’s settlement with the industry.
Carl Bethel QC told Tribune Business he wanted “to hear what he has to say” for himself after being informed that Mr Munroe, who represents the Island Game, Paradise Games and Asure Win chains, had “some issues” he and the government did not agree with.
Mr Bethel’s comments came after this newspaper was informed that the web shop industry is effectively split down the middle on compliance with the taxation settlement with the government - especially when it comes to paying taxes owing from the first half of the 2018-2019 fiscal year.
Tribune Business sources, speaking on condition of anonymity, said half the sector - namely Sebas Bastian’s Island Luck and Ultra Games chains, and Chances - had paid up and were current with both their first half taxes and those for the calendar year-to-date that are based on the new, higher rates.
Those three operators signed up to the mid-February 2019 settlement with the Government, but this newspaper was informed that the outstanding monies were due from those who did not - Mr Munroe’s clients and Craig Flowers’ FML Group of Companies. These four were said to have started paying what was agreed only to stop.
K P Turnquest, deputy prime minister, yesterday told Tribune Business that its information on who had paid/not paid taxes under the settlement agreement was “for the most part” correct.
“Everyone paid something, then most of them fell off,” he said, expressing reluctance to comment further as the matter was likely headed to the Supreme Court once again.
“The fact of the matter is that if the tax is due it needs to be paid,” Mr Turnquest said “I’m going to leave it to the legal people for the moment and see how this works out.
“Every dollar counts. Though we are OK where we are, again it’s a matter of equity and fairness and we expect to collect the Government’s revenue. That’s how it goes.”
Mr Bethel, in a subsequent interview with Tribune Business, said he had been under the impression that all seven licensed web shops and their attorneys had agreed to the taxation settlement - even though Mr Munroe had told this newspaper on April 4 that his clients had not signed up to the deal.
“All I know for a fact is that he [his clients] has not paid, and from what I’m hearing from others he’s got some issues I don’t share, don’t agree with as a matter of law,” Mr Bethel said of his fellow QC.
“I want to confirm his opinion, and whatever he says we will go from there. I want to hear what he has to say. I’ll reach out tomorrow. I received some information this afternoon along the lines that you have. I will reach out tomorrow as I have got no formal communication from him.”
Mr Munroe has not returned multiple Tribune Business calls and messages seeking comment on the situation for the past week. Craig Flowers, the FML Group of Companies proprietor, has proven similarly elusive despite numerous messages and calls attempting to contact him.
Dionisio D’Aguilar, minister of tourism and aviation, declined to comment on the situation yesterday despite having last week warned web shops to “get on board and pay your fair share to the Treasury” otherwise their licences will not be renewed if taxes remain owing.
He argued then that there was no good reason for continued foot-dragging by some operators now that the industry’s taxation settlement with the government had been given legal effect, and revealed that two web shop chains - which he did not name - had been waiting for the Gaming Board to confirm the “specifics” of the agreement before they began to pay taxes owing for both the first half of the 2018-2019 fiscal year and under the new structure.
Tribune Business understands that the “issues” Mr Munroe and his clients have may include the retroactive payment of taxes for the 2018-2019 fiscal year’s first half under the old rate structure.
That system, which required web shops to pay the greater of 11 percent of taxable revenue or 25 percent of earnings before interest, taxation, depreciation and amortisation (EBITDA), was repealed when the 2018-2019 Budget was passed at end-June 2018.
Mr Munroe previously told Tribune Business that, as a result of that repeal and the attorney general’s previous undertaking not to enforce the new regime after the industry took the matter before the Supreme Court, no taxes were currently due or owing by the sector.
“That’s our position. I think the Attorney General may dispute that, but that’s our position and that may or may not be something that goes to court,” he said on December 4, 2018. This newspaper understands Mr Munroe and his clients may be indeed holding to that position, hence the halted payment of retroactive taxes and current stand-off.
Under the mid-February settlement agreement, so-called “back taxes” for the first half of the 2018-2019 fiscal year - from July 1-December 31, 2018 - were to be levied at the web shop’s old taxation rate of 11 percent of gaming revenues.
This was replaced by the new “sliding scale” operator tax, and its new rates of 15 percent and 17 percent, with effect from January 1, 2019. As a result of this compromise agreement, Mr D’’Aguilar previously said the Government was now projected to earn $50m per annum - rather than the initially forecast $75m - from gaming taxes.
While this represented a one-third, or 33.33 percent, reduction from the 2018-2019 Budget’s target, the Government argued that it still represented a 127 percent increase in revenue generated by web shop taxation - thereby making for “an acceptable compromise”. Implementing the “compromise”, though, appears to have been much harder than thought.
The Government failed to realise $25m in projected first half revenues as a result of its legal battle with the web shops, with $15m of this sum relating to “sliding scale” operator tax proceeds and $10m attributed to the now-replaced 5 percent Stamp Duty on patron deposits.
Using the old “operator” structure for the 2018-2019 first half will generate around $11-$12m for the Treasury based on previous full-year collections of $21m, which is less than 50 percent of what the Ministry of Finance had projected to earn - $15m “sliding scale”, and $10m from the “patron tax” - during that period.