The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Businesses need “more room” than the 48-hour period they have been given to comply with the terms for a Value-Added Tax (VAT) ‘virtual warehouse’, a Tax Coalition co-chair yesterday promising to raise the concern with the Government.

Robert Myers told Tribune Business that the October 15 deadline by which businesses had to apply to use the ‘virtual warehouse’ needed to be “pushed back”, given that online registration for mandatory VAT payers was only set to start two days earlier.

Businesses can only employ a ‘virtual warehouse’ if they have already completed the VAT registration process, and the two-day (48 hour) window between the October 13 online start and ‘warehouse’ application may leave many struggling to meet the latter deadline.

Agreeing with Tribune Business’s analysis when it was pointed out to him, Mr Myers replied: “You’re right. I didn’t pick that up. We’ll take that up at the advisory [committee] level.

“We need to get that [October 15] pushed back for sure. We need at least a couple of weeks to get sorted [with registration].”

While the Government has begun to ramp-up its VAT education and implementation efforts, many in the private sector believe the whole process is being rushed, and that there is too little time between now and January 1 (just over three months) to effect a seamless introduction of the new tax.

The Christie administration, though, appears determined to meet this deadline, with even Mr Myers and his fellow Coalition for Responsible Taxation co-chair, Gowon Bowe, calling on it to continue pushing for New Year’s Day and only change course if it is not ready from its side.

The deadline by which Bahamian businesses, chiefly large importers, wholesalers and retailers, must apply to use a ‘virtual warehouse’ has already been pushed back once - from September 30 to October 15.

The Bahamas Hotel and Tourism Association (BHTA) said on its website that the ‘push back’ resulted from calls by itself and others in the private sector, but it appears another delay - caused by the late VAT online registration start - may be warranted.

While the Government has promised to intensify its visits and one-to-one meetings with Bahamian businesses, especially those 100 expected to be its largest VAT payers, Mr Myers suggested yesterday that the ‘virtual warehouse’ application deadline be pushed back to end-October.

“They [the Government] say they’re going to have 10 people going out for so many days to so many businesses,” Mr Myers said.

“We’ll see how they go, but a lot of companies needing a ‘virtual warehouse’ will not be registered by that particular day [October 15].

“There’s a lot of people, not just in Nassau but country-wide, such as large hardware stores in Abaco, food stores all over the country, that need this. Some of those food stores are not small,” the Tax Coalition co-chair told Tribune Business.

“It needs more room. Maybe we get all registrations done by the end of October. Give us until October 31 to register with the virtual warehouse, then got from there.”

Tribune Business was first to reveal earlier this month that the Government was developing a ‘virtual bonded warehouse’ concept to ease the VAT transition for businesses with large physical goods inventories.

“The arrangements will be managed by the Customs Department, and may require qualifying importers to post a financial bond. With the bond in place, during the months of November and December, these VAT registrants will be allowed to import items targeted for duty savings without having to pay the taxes up front,” Customs said.

“Businesses will have to all report on sales of inventories made before December 31, and pay duty on sold items at the current rates that are in effect. Bonded items, which remain in inventory after December 31, will benefit from the lower rates taking effect on January 1, 2015. Remaining stocks will also be subject to VAT. Merchants have until February 28, 2015, to pay both the duty and VAT.”

Companies using ‘virtual warehouses’ will also have to get their inventories certified by a Bahamas Institute of Accountants (BICA) licensed accountant, with reports submitted to Customs on New Year’s Eve.

Mr Bowe, Mr Myers’s fellow Tax Coalition co-chair, previously told Tribune Business that the private sector had yet to fully embrace the concept yet.

“That has not yet been wholeheartedly accepted by the retailers and wholesalers,” the Coalition for Responsible Taxation co-chair told Tribune Business. “We’re not at that point yet.

“That’s one that’s not been fully accepted and digested by the business community. There’s some concerns, and we need to work through how it works in practice.

“It’s an olive branch, and more digestible than what was originally proposed. But there’s still got to be a lot of dialogue.”

Rupert Roberts, Super Value’s owner, said the supermarket chain would “run down” its inventory as the VAT transition loomed, saying this “suits us better” than the proposed ‘virtual warehouse’.

The concept also got a guarded welcome from Gavin Watchorn, chief executive of BISX-listed food retail and franchise group, AML Foods.

He told Tribune Business last week: ““It’s better than what was originally proposed. I think it will be somewhat beneficial.”