The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government yesterday moved to further enhance the ease and efficiency of doing business by giving Bahamian manufacturers a January 1, 2023, “drop dead date” to start applying for renewal of their duty-free concessions online.

Ministry of Economic Affairs officials, in a webinar for local producers to update them on the reforms, revealed that from New Year’s Day they will have to seek renewal of their existing Industries Encouragement Act tax breaks via Bahamas Customs’ Electronic Single Window (ESW) or Click2Clear.

Designed to replace the existing manual, paper-based approvals system, officials promised that it will “reduce the waiting time in some instances” when it comes to manufacturers receiving their renewed approvals and “allow for a smooth transition” to the digital, electronic world.

Brickell Pinder, the Ministry of Economic Affairs’ director of trade and industry, said: “We are currently working with Customs to try and make the portal accessible from December 1 so you would have access to it in the next few weeks, but as of January 1, 2023, all renewal applications have to come through Click2Clear.

“For those persons ready to provide renewals we will have the portal ready on December 1 to accept applications, but definitely the drop dead date is January 1, 2023.” The biggest change for Bahamian manufacturers is that they will now have to estimate how much of those raw materials they are seeking Customs duties exemptions on will be used during the year.

They will also have to enter the correct HS (Harmonised System) code for the relevant raw materials in the Click2Clear system. Manufacturers were told that if they under-estimated the amount of raw materials required, and use up the quantity imported duty-free before the year is out, they will have to submit either a “supplementary” or new exemption approval application via Click2Clear.

Customs officials explained that while manufacturers can use their original approval letter “multiple times”, when the tax-exempt quantity of raw materials “gets down to zero the system will prompt us that there are no more items under the approval”. All duty-free renewal applications, whether they are the original or “supplementary”, first have to be approved by the Ministry of Economic Affairs’ trade and industry unit.

Responding to manufacturer concerns over difficulties in estimating how much imported raw materials they will use in a given year, since this will depend on sales and demand, Rochelle Smith, first assistant secretary in the Ministry of Economic Affairs’ trade and industry unit, said they should still have “a fair idea” of their needs. And, if companies exhausted their duty-free supply, they still have the option to apply for the tax exemption on any top-up.

“What we’re saying is that if you don’t have an exact amount you should be able to give a pretty fair idea of what it is you would use for the calendar year,” she said. “As a guiding post, select the amount put in the application. You should have a fair idea of what you consume in any given year, so use that as a starting point.

“The system draws down on what is approved by the Ministry of Economic Affairs until you get to zero. Submit a new or supplementary approval request. It has to go to the Ministry of Economic Affairs before the Customs Department can act. The system will be mandatory from January 1, 2023.”

Jonathan Cartwright, president of the Bahamas Light Industries Development Council, who attended the webinar, told Tribune Business that while there will likely be an initial “learning curve” the switch to an electronic-based approvals process should improve efficiency and ease of doing business for local manufacturers.

The Cartwright’s Bedding president said: “I think it’s a positive move. It’s a lot of paperwork involved now, even when Customs comes to your place to inspect a trailer. Typically, when things go online it tends to be easier and more efficient.

“They say they want us to estimate beforehand what materials we use for the year. That’s a little different from now, which is when we tell them the material we use and it’s just approved. They want us to list each tariff and estimate how much we’re going to use for the year, and said if we go over that we can do a supplemental application.

“I guess it will take some getting used to, but I imagine it will be more efficient. I can’t see it being less efficient. The first year year will be the most difficult,” Mr Cartwright continued. “They want us to apply for the benefits every year. Every year we applied and gave them the raw materials. They’d approve it and give us a blanket exemption. However much foam you needed, they’d approve it.

“Now we have to list the tariff headings and they want us to estimate how much we will use each year. They made it seem that if you under-estimate it’s not a big deal. Initially there will be a bit of a learning curve, but I don’t see any particular problems with it.”

Ms Pinder yesterday said manufacturers applying for “approved” status under the Industries Encouragement Act for the first time will still have to submit a manual, paper-based application to the Ministry of Economic Affairs although there are plans to take this online too.

Under the present system, those seeking renewal of the duty-free concessions under the Act must supply the ministry with a formal letter of request, place their existing Business Licence and Tax Compliance Certificate. These documents as of New Year’s Day 2023, will all have to be uploaded electronically via Click2Clear with approvals coming via the same route.

The duty-free concessions cover raw materials and machinery, plus construction tools and materials for building, renovating or expanding a manufacturer’s premises.