The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Port Authority (GBPA) licensees have been advised that the new 1 per cent Customs administrative processing fee and Environmental Levy breach the Hawksbill Creek Agreement (HCA) and should be challenged in the courts.

But Tribune Business can also reveal that attorneys have warned them not to challenge the new fees for Customs officers to attend shipment clearance outside their normal hours or place of business.

This newspaper understands that Callenders & Co have advised that new developments in English case law, which the Bahamas largely follows, say processing and administrative fees charged by government bodies and regulatory agencies are not a tax if they are merely intended to recover “the costs of providing a service”.

As a result, sources have told Tribune Business that the Callenders team, chiefly Fred Smith QC and Carey Leonard, have advised GBPA licensees and the Grand Bahama Chamber of Commerce not to challenge the Customs officer attendance fees in any Judicial Review action.

“That is a service the importer is asking the Customs Department to perform,” one source said.

Still, a letter sent out yesterday by the Grand Bahama Chamber of Commerce said the attorneys had recommended seeking to overturn both the 1 per cent Customs administrative processing fee and Environmental Levy, plus the 5 per cent Stamp Duty on profits a Bahamas-based company was repatriating to a foreign parent.

“The Environmental Levy is a tax on the importation of certain goods, and so should not be charged to licensees of the GBPA importing supplies or manufacturing Supplies as defined by the Hawksbill Creek Agreement,” the Grand Bahama Chamber of Commerce said.

The same applied to the 1 per cent Customs administrative processing fee, plus the 5 per cent Stamp Duty being imposed on Bahamian dollar profits being converted into foreign currency for repatriation overseas to parent companies.

“The 5 per cent Stamp duty should not be charged on licensees of the GBPA remitting to a related party abroad $500,000 or more per annum in profits or dividends,” the Grand Bahama Chamber of Commerce said of Callenders’ advice.

“The 5 per cent Stamp Duty should not be charged to licensees of the GBPA on whose behalf a bank in the Port area remits abroad $500,000 or more per annum in profits or dividends to a party related to such licensee, or a payment for a service by such related party, provided that the remittance is in respect of the licensee’s business.”

The Grand Bahama Chamber is now seeking its members’ support to proceed with any Judicial Review action, while keeping open communications channels with the Government and GBPA in the hopes of a ‘diplomatic solution’.

“At the core of the legal issues discussed are fundamental concerns that affect the economic recovery and sustained well-being of Freeport and Grand Bahama Island,” the Grand Bahama Chamber of Commerce said.

“There was a significant absence of public consultation before changes to the Customs Tax Code were put in place. In drafting the changes, there appears to have been no substantive consideration of the specific impact on the industrial and commercial competitiveness of Freeport under the Hawksbill Creek Agreement.”

And it added: “The rights of licensees under the Hawksbill Creek Agreement appear to have been breached.

“Many of the changes will specifically harm the already weak economic recovery of Freeport. Most, if not all of the resultant increases in costs to business, will ultimately be passed on to the Bahamian public, driving up the cost of living.

“Our economy will bear the burden of further impediments to cost and ease of doing business in Grand Bahama.”

The Chamber also warned that there was a “risk of companies shedding jobs to stay competitive, hence higher level of unemployment in Grand Bahama”.

One source said of the Chamber’s attitude, and that of many licensees: “They’ve decided they need to go ahead with the action and basically injunct the Government on this stuff.

“It’s looking pretty good as far as them going for it. They’ve got the money collected for it. They’ve got to work out who the named litigants will be. It’s looking good.”