The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Value-Added Tax (VAT) registrants will be allowed to bring in goods duty-free two months prior to implementation in a bid to “soften” the tax’s impact, a Customs officials revealed yesterday, with the Government proposing to operate ‘transitional’ bonded warehouses.

Shedding some light on the plan in an interview with Tribune Business, Tony Scriven, assistant comptroller of Customs, said the bonded warehouses, which are intended to prevent Bahamian businesses paying pre-July 1 Customs duty rates as well as VAT, while also encouraging companies to run down their stocks, would be set up to soften the implementation impact.

Mr Scriven, who was a presenter at a Bahamas Institute of Chartered Accountants (BICA) session on transitional arrangements for VAT, explained: “The Customs duties are going to be reduced on the implementation date of VAT, which is proposed as July 1.

“What the Government wants to do is soften the impact of the introduction of VAT, so that people who are registrants - like the large wholesaler - are not adversely affected.

“The Government is proposing to operate transitional bonded warehouses under the Customs Management Act whereby they will be able to bring their goods into the country two months prior to VAT without having to pay the higher rate of Customs duty.”

Mr Scriven added: “They would go into these bonded warehouses without paying any duties. If a company were to bring in 10,000 cases of an item, but they know that they cannot move that before the implementation of VAT when the lower rate comes in, it would be unfair for them to pay the old rate of duty.

“They can go into these warehouses and they only need to take out 1,000 cases. After the implementation of VAT, one month after the implementation they would have to take all these goods out of the warehouse and pay the lower rate of duty.”

As to what facilities would be used as bonded warehouses, Mr Scriven said: “We have bonded warehouses now in the Bahamas. The warehouses that these major importers are using now can be utilised as a bonded warehouse.

“It’s a system whereby the goods come in, it goes in a secure area managed by Customs and the importer. There would be a dual lock system where Customs would have a lock and the importer would have a lock.”