The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Value-Added Tax (VAT) deferral system was yesterday hailed as an “excellent help” to Bahamian manufacturer cash flows, with firms enjoying Industries Encouragement Act incentives also allowed to continue their existing bond arrangements.

Andrew Rodgers, the Nassau Glass and Bahamas Aluminum Manufacturing principal, said manufacturers firms can request approval for a VAT payment deferral on their raw materials at the border, noting that some bring in supplies worth $100,000 a week.

Mr Rodgers, a member of the VAT Education Task Force, said manufacturers, as of December 1, could apply to the Ministry of Finance for a ‘deferral’ on paying VAT at the border on their raw materials.

“When your raw materials or machinery come in, the VAT will be deferred at the border. This helps local manufacturers with cash flow,” said Mr Rodgers.

“Some local manufacturers could bring in $100,000 weekly in raw material. Thats $7,500 weekly [in deferralsavings]. It’s an excellent help to local manufacturers.”

Mr Rodgers added: “There are two Acts in place for local manufacturers. Under the Industries Encouragement Act, you have protective bonds in place. Should you break the law they can draw down on these bonds.

“If you are under the Industries Encouragement Act, the Ministry of Finance has agreed that you can use your existing bonds. That’s a big help as well, whereby you don’t have to establish any new bonds. If you are under the Tariff Act, those registrants do not have protective bonds in place. If you are going to apply for a deferral and you are under the Tariff Act, you will have to implement a protective bond.”

Mr Rodgers said the Government has indicated that it is not prepared to revert to VAT ‘exclusive pricing’, as initially proposed.

He added that larger firms with significant inventory could have until June 2015 to make the necessary transition, although that is not a final government position. Bahamian retailers have argued that VAT ‘inclusive’ pricing would mean that the advertised price already includes the 7.5 per cent VAT, but would impose a massive administrative cost on businesses as all inventory would have to be re-priced, re-ticketed, reprinted or relabelled.