The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Auditor General’s Office has urged Customs to collect millions of dollars in unpaid taxes and fees, including $3.747m collectively owed by 13 airlines as at end-June 2018.

The government’s financial watchdog, headed by auditor-general Terrance Bastian, pictured, in its examination of the government’s accounts for that year noted that sums ranging up to $1.483m owed by an individual airline had been outstanding for up to five years.

While none of the airlines were named, and no distinction was made between Bahamian and international carriers, the report said of the service charge and processing fee arrears: “Revenue remaining outstanding for an inordinate period decreases the collectability rate and is at risk of not being collected. Delinquent payments on accounts receivables affect cash flows and revenue performance.

“We noted documentation on file communicating requests to the airline companies to fulfill their legal obligation to bring the outstanding amounts to account. We recommend that Customs continue to pursue the collection of the $3.747m outstanding airline service charges and processing fees.”

Delinquency on service charges, which are levied for Customs officers attending ship and plane arrivals, sometimes after hours, was not confined to the airline industry during the 2017-2018 fiscal year, which represented the Minnis administration’s first term in office.

The Auditor General’s Office said its review of outstanding billings for transshipment fees uncovered one unnamed company that owed Customs some $3.841m in unpaid service charges, which included VAT worth $164,732.

“We were informed that the company is paying the monies collected for passenger departure taxes and processing fees, but not the service charge fees,” the report said. “The process to collect the revenue at departmental level, and additional efforts made by Customs management were unsuccessful. Consequently, the matter is at the Ministry of Finance for further review and resolution.”

The Auditor General’s Office added that the company involved was in breach of Customs Management regulations mandating that service charges be paid for officers to deal with ships or planes when they have arrived in The Bahamas.

Calling for the $3.841m to be collected forthwith, the report also identified three “dishonoured cheque” payments made to Customs during the 2017-2018 fiscal year. These totalled $1.186m, but one - again from an unnamed company - accounted for the majority of this sum at $1.154m.

“Going forward, a manager’s certified cheque and debit card should be accepted or direct deposit to prevent revenue loss,” the Auditor General’s Office said.

Some $2.22m was collected during that fiscal year through Customs’ investigations unit and post-clearance audit functions, with the former recovering $1.24m or 56 percent of the total sum. Total recoveries from both sources were down by $1.39m year-over-year compared to 2016-2017.

This, the report added, was due to a 73 percent reduction in field audits from 37 to ten, while desk audits dropped by 96 percent from 441 to just 18. However, Freeport-based investigations leapt by 205 percent to 122 compared to just 40 in 2016-2017.

“The number of investigation cases increased in 2018 by 85 (from 155 in 2017 to 240 in 2018),” the Auditor General’s Office said. “The increase resulted in $1.246m revenue recovery.”