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Web Shop Hold-Outs On ‘Shaky Ground’

Attorney General Carl Bethel.

Attorney General Carl Bethel.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Attorney General yesterday warned the web shop industry’s tax hold-outs they are on “very shaky ground” in failing to comply with the settlement agreed with the Government.

Carl Bethel QC told Tribune Business that the Minnis administration had strong legal arguments against the position being taken by Wayne Munroe QC and his three web shop clients - Island Game, Paradise Game and Asure Win.

Two of these operators are understood to have only paid taxes due for July 2018, while the other and Craig Flowers’ FML Group of Companies have yet to pay anything at all for the 2018-2019 fiscal year.

Mr Bethel on Tuesday had accused Mr Munroe of “playing games”, with the attorney general’s efforts to reach his QC counterpart before and during the Easter weekend proving fruitless as the latter was off-island.

Disclosing that “nothing as yet” has been resolved between the Government and industry hold-outs, Mr Bethel yesterday told this newspaper: “I called Mr Munroe. He said he was off-the-island and saw the missed calls, but never called back. I’ll give him a call.”

Tribune Business yesterday received further confirmation that Mr Munroe and his clients are opposing 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of taxable revenue or 25 percent of earnings before interest, taxation, depreciation and amortisation (EBITDA), was repealed when the 2018-2019 Budget was passed at end-June 2018.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 told Tribune Business in late December 2018 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 due or owing by the sector for the first six months of the current legal year.

“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,” Mr Munroe said then.

It is understood, though, that the Government believes it has a solid legal position to demand the payment of retroactive or ‘back’ taxes under the settlement agreement’s terms by virtue of the Interpretation and Clauses Act’s section 22.

This allows a repealed law, such as the old 11 percent taxation structure, to remain “in force” until the one replacing it takes full effect. “Where any written law repeals in whole or in part any other written law, and substitutes other provisions therefore, the repealed written law shall remain in force until the substituted provisions come into operation,” the Act states.

Mr Bethel declined to confirm this when it was put to him yesterday, but told Tribune Business: “I don’t propose to argue in the press. We’re relying on the law. We have good legal grounds, and Mr Munroe is on very shaky legal grounds. If he wants to persist, that’s his problem.”

This newspaper, meanwhile, can reveal exactly where the seven licensed web shop operators are in paying their taxes as per the settlement agreement reached with the Government in mid-February.

A highly-placed source, speaking on condition of anonymity, confirmed that 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 2019 calendar year-to-date that are based on the new, higher rates.

Those three operators had all signed up to the mid-February 2019 settlement with the Government, with the outstanding monies due from those who did not. Tribune Business was told that Paradise Games and Asure Win had paid taxes due for July 2018 and then stopped, while FML and Island Game have yet to pay anything in accordance with the settlement’s terms.

Both Mr Munroe and Mr Flowers again could not be reached for comment yesterday. Mr Bethel yesterday confirmed that Island Luck and Ultra Games, together with Chances, were fully paid-up when it came to taxes due for the 2018-2019 fiscal year, but declined to comment further.

“You go by whatever source you have,” he said. “I’m not a man to be scrutinising financial statements. I’m aware of the bigger picture but not the minutiae.” The Attorney General on Tuesday had described the web shop taxation issue as “a little confused”, as he believed some had started paying again, but added of Mr Munroe: “In my view he’s playing games.”

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.

K P Turnquest, deputy prime minister, yesterday criticised the web shop hold-outs for continuing to “challenge the Government’s ability to tax” and further extending the uncertainty for both the sector and Public Treasury.

“We do have a number of outstanding payments from a number of the gaming houses,” Mr Turnquest confirmed to the media. “We certainly hope that the agreement that had been reached with the industry will be adhered to, and we’ll be able to report to you shortly that everybody is current and living up to the commitment that was made.

“It’s unfortunate that several of them continue to believe they can challenge the Government’s ability to tax. Hopefully that will be disposed of in short order, and we can all move on with some surety with what the taxation is for the industry and we can better predict what the revenue is going to be.”

Dionisio D’Aguilar, minister of tourism and aviation, who has responsibility for gaming, yesterday told Tribune Business: “Negotiations are ongoing and everybody is trying to sort it out.” He declined to comment further.

As a result of this settlement compromise, 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.

Comments

DDK 7 months, 3 weeks ago

Not only are these #^F^*I#(@N#(!!%G/ miscreants reducing what's left of the Bahamian economy to ashes, creating a huge group of gambling addicts and destroying families, they are refusing to pay the taxes which were levied on them to the further detriment of services to the Bahamian people. The politicians of both this and former government are complicit in the scam. National Lottery has been suggested over and over again, but will they listen? No. Too lazy and too greedy. A National Lottery might not bring in quite the same volumes as the numbers houses but, IF RUN HONESTLY, will aid in the reduction of poverty, crime and other related other social ills, as well as provide a legitimate source of income for The Public Treasury.

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John 7 months, 3 weeks ago

The way the webshop business is skewed, a number of them may not be able to afford these new ones aces. So the government with wrong advice and Hastings’s to collect more taxes may be forcing some webshops to close and leaving an oligopoly of mega rich operators to monopolize and control the market. So in its attempts, ‘to tax the numbers boys out of existence,’ government may have created a worse and more serious situation where there’s less competition and less employment. So the remaining web boys can decrease the odds of winning, decrease the margins and still make more money. A similar situation happened in banking after Obama spent billions to bail them out. Instead of chasing after the retail market or consumer loans and mortgages a small group went after countries, like the Bahamas, granting them loans with little or no breathing room. And many of the countries found it difficult to pay (their national debt). And so theses governments had to sacrifice doing essential things like building schools or hospitals or paving roads. Some raised taxes to no avail, causing inflation to skyrocket and necessities , medicine and food. to become scarce or I unavailable. Some saw their currency collapse. And then the same banks came along and offered to bail them out. But at higher interest rates and more rigid terms. And these countries found themselves getting in even greater debt. And citizens protested and some violently revolted. But by that time it was too late. The damage had been done.

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hj 7 months, 3 weeks ago

When any consumer buys anything in the Bahamas he pays VAT whether he likes it or not. If any businessperson is late by even 1 minute in his VAT filings and payment the fines keep rolling. Yet for the number houses politicians talk about "reaching out" and negotiating. Either all of us have to pay taxes or repeal the laws.

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Well_mudda_take_sic 7 months, 3 weeks ago

The FNM leadership is deep in the pockets of the racketeering numbers bosses and their criminal enterprises.

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bogart 7 months, 3 weeks ago

GLARING ...OBVIOUS.....!!!!!!.......BY DA MAJORITY OF THE COUNTRY.....PLENTY MORE PORE ....VOTERS......REALLY....JUS CANT WIN FER LOSIN...

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birdiestrachan 7 months, 3 weeks ago

Mr:Bethel did you clear this with Mr Symonette before you spoke "BOY:"

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screwedbahamian 7 months, 3 weeks ago

Why is the Bahamas Attorney General having to tolerate and spend the PEOPLES TIME responding to and explaining this FOOLISHNESS. Don't you think the world of degenerate Criminals are watching all this and laughing their heads of at our government. The law was implemented to govern the Web Shop Numbers boys and their national destructive enterprises through a tax structure deemed necessary by the peoples government, then renegotiated by the peoples government to the supposedly agreement of these NATION TERMITES. Now they want more renegotiations and are withholding the PEOPLES TAX MONIES that are due and payable. Stop THIS MADNESS, correct the passed mistakes and revoke their licenses ( with a TAX LIEN against their business for the amount owing the people) and IMPLEMENT A NATIONAL LOTTERY that will benefit ALL THE PEOPLE OF THE BAHAMAS. Mr. ATTORNEY GENERAL STAND UP AND BE A PERSON OF MORE ACTION and less words with these criminals. Period.

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ABOMINATION 7 months, 3 weeks ago

Agree with Screwbahamian! A NATIONAL LOTTERY! Wake up Bahamians, speak up for the right things, or are you all busy gambling your hard earned monies away and making the young boys richer and richer, you cannot even get to their Ocean Estates homes.....which you paid for!!!.while you sit to wonder how to pay your bills. I guess everyone should start an underground numbers gambit...who are they to say you are operating illegally...we voted NO!!! so it should not be legal...carry on Bahamians, supporting crooked and corrupt! Sad.. Do your jobs Politicians, do right by the Bahamian people and God!

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John 7 months, 3 weeks ago

So does the Bahamas have laws against agents of other countries operating illegally or other unregistered in the Bahamas? They call them secret agents or diplomats. What if these agents were found to be spreading dangerous or harmful propaganda against the country. Or even involved in weapons or drug smuggling? Are they arrested and charged before the criminal courts or is everything kept ‘hush, hush’ and swept under a diplomatic rug?. Because some very serious information is surfacing.

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