By YOURI KEMP
The Abaco Chamber of Commerce’s president yesterday hailed as “fantastic news” the Prime Minister’s decision to make the island immediately VAT free, but warned that questions remain.
Ken Hutton queried whether Nassau-based businesses would be placed at a disadvantage because VAT was still being levied on goods purchased from them by Abaco residents and companies, yet product imported directly from the US will now be tax-free.
“I think that it is fantastic news,” Mr Hutton said of Dr Minnis’ announcement, but he swiftly added: “Does this include provisions for Nassau businesses to sell goods into Abaco?
“Because if we are importing goods from the United States we don’t have to pay VAT, but if we are buying goods in Nassau we have to pay VAT. This puts Nassau businesses at a competitive disadvantage and we need to encourage local businesses as much as possible.”
Mr Hutton also told Tribune Business about the process he expects for Abaco businesses to take advantage of the VAT-free regime. He said that after hurricanes Matthew and Joaquin, all a company had to do was “register with the Ministry of Finance and there is a registry that records all sales going into the disaster area”.
“I am very encouraged by announcements made by the Prime Minister,” he added. “Based on what he said it is a huge game changer, especially the formation of this Disaster Reconstruction Authority. It is a huge forward thinking step in my opinion. We would like to see the structure of it.”
Dr Minnis yesterday told the House of Assembly that Abaco will be VAT-free immediately for both residential and commercial products, with island’s major airport set to re-open this weekend to international flights.
He said the December 1 date originally set for the VAT-free regime will now only apply to Grand Bahama, and explained this was because Grand Bahama has “inventory” while Abaco has nothing to charge VAT on.
“There was some degree of confusion as to what was allowed duty free and VAT free within Abaco, and I know that the commencement period for VAT-free has been placed at December 1,” Dr Minnis said during his contribution to debate on the Disaster Reconstruction Authority Bill 2019.
“The explanation given was that it would take a couple weeks to readjust the computer to deal with the VAT-free component, but we must understand that Abaco has no inventory with no computer. There is no commerce. There is nothing to adjust. Only Grand Bahama, and therefore the Order is being made/drafted so that Abaco will be VAT-free immediately.”
He added: “Grand Bahama would be delayed until the 1st because Grand Bahama has inventory that has to be dealt with appropriately, but there is no way or no reason why Abaco should be penalised because Grand Bahama has inventory.”