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'Big Jump' Over Vat Realty Submissions

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government’s requirement that all documents for “stamping” on New Providence be submitted via e-mail from August 1 was yesterday described as “a big jump” by practitioners.

Attorneys, speaking on condition of anonymity, questioned whether 20 days was sufficient time for everyone to come to grips with the electronic submission of conveyances and associated paperwork to the Department of Inland Revenue.

Yet that transition time is much greater than that allowed for islands other than New Providence, where all documents requiring “stamping” - whether under the Stamp Act or the value-added tax (VAT) now being imposed on real estate transactions - were supposed to be submitted electronically from July 1.

The details are contained in “procedures for the VAT stamping” of conveyances that were released yesterday by the DIR. Once all documents are “vetted”, the revenue agency is pledging a five-day turnaround time following which practitioners will be summoned to bring the original documents together with the necessary tax payment in the form of a manager’s cheque or bankers draft “only”.

“Effective July 1, in New Providence all documents that are required to be stamped under either the VAT Act or the Stamp Act are to be submitted to the Department of Inland Revenue,” the procedures stated. “Documents can be submitted in person at DIR’s headquarters at Shops of Carmichael Plaza, Carmichael Road, Nassau, Bahamas or via email to NP@bahamas.gov.bs.”

Yet they then added: “As of August 1, 2019, all documents must be submitted via email at NP@Bahamas.gov.bs. Submissions will be vetted and you will be advised by the department within five days from the date of presentation.

“Original documents must be presented at the Department of Inland Revenue headquarters...for stamping along with full payment by way of a manager’s cheque or bankers draft only, made payable to the ‘Public Treasury’ and DIR’s notification of vetting completion.”

As for other islands, the “procedures” said: “As of July 1, 2019, all documents that are required to be stamped under either the VAT Act or the Stamp Act are to be submitted for vetting via e-mail.” Vetting time and payment methods are the same as for New Providence.

Tribune Business was informed prior to Independence Day that all the conveyancing-related documents processed by the DIR during the first week of the new fiscal year were ones submitted prior to July 1.

One attorney, speaking on condition of anonymity, told this newspaper that the requirements set out by the DIR “sound so bizarre” and would likely create an issue for the Bahamas Bar Association to comment on and address.

“It might be OK but it’s a big jump,” they added of the August 1 electronic submission deadline for New Providence. “Are they going to get everyone to understand it in the next two weeks? That sounds like a possible circus. It seems to reflect their lack of understanding of the conveyancing process.”

The attorney also questioned why law firms, which paid millions of dollars in taxes to the Public Treasury on behalf of clients on a regular basis, were now seemingly prohibited from writing cheques on their company accounts.

With banks charging $10, and implementing new procedures, for a draft, they added: “This just increases the time, cost and inefficiency. What they could do is make life easier by enabling us to pay online. That would be wonderful. People are going to wonder why their legal fees are so high. Between compliance and this it’s not making our jobs easier.”

The Government’s release comes after Tribune Business last week reported attorney complaints that there was “total confusion” stemming from the switch from Stamp Duty to VAT on real estate transactions, with practitioners going “back and forth” between the DIR and Public Treasury amid uncertainty over which agency to deal with.

K P Turnquest, deputy prime minister, acknowledged to Tribune Business: “There is a bit of legitimate confusion between Inland Revenue and Treasury that will be sorted out by Monday. It’s brought on by the fact that while real estate attracts VAT, affidavits and other documents attract stamp tax.

“These two functions are in separate locations, resulting in a bit of a run around. As I mentioned, we are sorting this out with a view to house both the Stamp Tax and VAT at the Department of Inland Revenue for these transactions.”

The Government’s release yesterday said the DIR “has full responsibility for all tax matters governing realty transactions now that amendments to the Stamp Act and Value Added Tax Act have taken effect”, adding that the changes were “primarily administrative” since all rates have stayed the same.

“We know home owners and industry professionals were looking for guidelines on implementing the new amendments, so we are happy to announce the streamlined process and that information is now available online. Long-term, we are committed to delivering a simple and convenient process for online applications and online payment, so we are asking for patience as we transition,” said Gaynell Rolle, acting controller of Inland Revenue.

“This is just the beginning because our ultimate goal is to have the entire process automated and delivered online. In fact, the transition is already under way as we have developers working on the digital system. We plan to run a pilot test later this year, but eventually we will have a fully automated, easy-to-use online system for realty transactions similar to the portals we now have for business licence and VAT filings.”

While the Public Treasury previously handled some stamp tax matters, all matters relating to real estate transactions now fall under DIR. The new rules, which took effect on July 1, 2019, impact all mortgages and conveyances undertaken by homeowners and businesses.

Comments

Economist 3 months, 1 week ago

"Submissions will be vetted and you will be advised by the department within five days from the date of presentation."

This is a very good step forward. A government department that can get back to you within 5 days. WOW!!!!!

I hope the rest of the procedure will work just as fast.

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DWW 3 months, 1 week ago

This sounds like some very good intentions, but I am putting good odds on the fact that there will be a royal cluster$#$% on August 2nd. let me go make some popcorn for the show.

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