By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government’s Value-Added Tax (VAT) Unit and Customs Department are at odds over the latter’s demand that Freeport businesses, who submitted December’s duty-paid entries after the New Year, charge the new 7.5 per cent levy on these sales.
Tribune Business can reveal that impacted Grand Bahama Port Authority (GBPA) licensees have been ‘caught in the middle’ of different interpretations by two different government agencies over how VAT should work.
And, with the January 15 deadline for licensees to pay due import tariffs, and have their reports accepted, fast approaching, those caught in this situation fear Customs may block future import shipments - further interrupting their business at a time when they can least afford it.
Larry Albury, Freeport Jetwash & Auto Mart’s general manager, confirmed to Tribune Business that his company was among those embroiled in this situation which remains unresolved.
“It is happening to businesses in Freeport,” he told this newspaper. “We put in our entries for duty-paid sales for the month of December, and they [Customs] came back and told us we had to pay 7.5 per cent VAT on our December sales.
“We told them those are 2014 sales, not 2015 sales. I have spoken to the VAT Unit quite a few times, and they said: ‘Don’t pay it’, but Customs is insisting we pay it.”
By demanding that VAT be paid on GBPA licensees’ December sales, Customs is effectively making the new tax retroactive to 2014 - despite it not being created in statute law until January 1, 2015.
Under Freeport’s ‘bonded goods’ regime, Port licensees have until the 15th of the following month to submit - and have accepted by Customs - a report on the previous period’s duty-paid sales.
These sales involve products acquired by non-GBPA licensees, with the vendor business applying the relevant duty and submitting this sum to Customs by the same deadline.
However, Customs is adopting the position that because the reports - and collected duties - were submitted after January 1, these sales should also attract the 7.5 per cent VAT on top. Yet the VAT Unit is saying ‘no’ - a stance that the impacted businesses are backing.
“We’re hoping they can work it out without interrupting our day-to-day business,” Mr Albury told Tribune Business of the two government agencies.
“As far as I’m concerned it’s a straightforward answer. These sales are 2014, and there’s no VAT on them.
“We’re hoping the two departments can address each other, talk to each other. It’s straightforward; it’s 2014 sales, not 2015 sales, and there’s no sales.”
Mr Albury said Freeport Jet Wash had attempted to provide Customs with December’s duty-paid entries, and payment, on the first business day of 2015.
Yet the agency had rejected this “quite a few times”, and there is less than one week left for Freeport Jetwash and others to meet the January 15 deadline to complete this process.
Customs has form for holding up companies’ import shipments at the border if there is a dispute between the two sides, an outcome that Mr Albury is keen to avoid.
“We don’t need any more interruptions to sales, when we’re trying to conduct business and trying to pay the bills,” he told Tribune Business.
“The close we get to the 15th, the more I’m going to be concerned about whether Customs is going to stop our shipments, entries coming in. I’ll cross that bridge when I get to it.
“My car sales with this VAT have gone out the roof. Cars are a luxury item, as some of them have gone up $4,000, $5,000 with this VAT.”
Mr Albury also confirmed that some Freeport businesses, anticipating the exact problems he is having with Customs and December 2014 entries, had submitted their reports and entries before January 1. Some even closed their doors on December 30 and 31 to accomplish this.
Stephen Albury, Car Quest’s principal, revealed to Tribune Business that his company had refused Customs’ demand to levy 7.5 per cent VAT on their December sales.
Confirming that his business was in the same situation as Freeport Jetwash, he said: “We’ve refused to pay it. They [Customs] have no grounds to charge it. If companies have a Taxpayer Identification Number (TIN), it’s up to the VAT people.”
Stephen Albury said his understanding was that the relevant government agencies were to meet on the issue in Nassau today, in a bid to resolve it by the week’s end.
“It’s impacting a lot of people,” he added. “We [Freeport Jetwash] and Car Quest have both refused to pay it because Customs has no grounds to charge it.
“They have no authority to charge it. Technically, if it’s not something owed to them, they can’t enforce that. But they’ll try.”
Stephen Albury indicated that he, too, was concerned that Customs might try to hold Car Quest’s future imports if the situation was not dealt with before January 15.
John Rolle, the Ministry of Finance’s financial secretary, could not be reached for comment.
Comments
asiseeit 9 years, 9 months ago
Legal extortion is all this is.
moncurcool 9 years, 9 months ago
This has got to be a joke. If this is really serious, then it shows the STUPIDITY of our customs department. How could you demand people to pay a tax on something in 2014, when the tax did not come into existent until January 1, 2015. Customs losing their dog gon it mind. Moreover, the Vat Unit which is responsible for VAT, says it is not t be paid, how can customs then demand payment. It shows the stupidity of government departments.
The_Oracle 9 years, 9 months ago
Not the first nor second time time they've tried this, although previous attempts failed. Stupid is as Stupid does.
B_I_D___ 9 years, 9 months ago
Customs and Freeport are always pissing each other off. Stupid thing is this re-affirms peoples positions that the custom department up there are power tripping idiots.
duppyVAT 9 years, 9 months ago
Welcome to the Republic of Freeport !!!!!!!!!! ........... LOL
ohdrap4 9 years, 9 months ago
well, the customs tried to call the vat unit but, no one answered the phone, so they could nopt clarify
TheMadHatter 9 years, 9 months ago
But, of course, people will refuse to come together within the auspices of the Retailer's Association or otherwise and agree that they will not open their businesses on the 15th of January for fear of legal ramifications unless this is resolved.
No. Just can't come together on that. If all the gas stations, hardware stores, grocery stores, etc would have a "sick-out" on the 15th and 16th and 17th - just three days - then they might call some attention to their issue.
But instead they will remain individual and not united.
Customs will pick them off and hack them one by one. Divide and conquer, a strategy that survives the passage of time.
TheMadHatter
takingback 9 years, 9 months ago
Why is it that we have to pay VAT So much times on one item? On top of the 20% or more that we pay for coustoms duty we also have to pay customs 7.5% of the total then another 7.5% to the shipping company for their shipping service. Why do we have to VAT on customs duty when customs duty is a tax itself?
ohdrap4 9 years, 9 months ago
peter turnquest mentioned it on the debate. duty "adds value" to the product.
For example, 20,000 car is valued at 33,000 in the bahamas, so you pay vat on that.
also vat goes on service, the shipping company provided a service, so the govt takes a slice.
the waiter at the restaurant, gave you service, so you pay vat on the tip that you paid him for his services [ although there are exceptions in this case]
the joneser who washed your car gave you service and you should pay vat, but thankfully, he is not a vat registrant.
The_Oracle 9 years, 9 months ago
The ultimate tax any consumer will (should) pay is 7.5% on retail. (or wholesale) the Government collects it in portions of that along the way from each entity in the supply chain, as each entity "adds value". (markup) A simple 7.5% sales tax would collect it only at the end retail sale. VAT represents a first world tax system with first world accountability at each stage, and is self enforcing. The exception to this is the cash economy, which will grow as it has in other jurisdictions.
jlcandu 9 years, 9 months ago
VAT may be so-called first-world tax system, but these countries also have first world compliance and systems. In this country, we do not have a robust manufacturing sector, which most if not all first world countries have. Tacking on a markup to the products you sell does NOT add value, as this idiot government is trying to sell to the masses. In this country, we buy items and then sell them. There is NO added value!!!
This is a glaring example of how a country tries to implement a tax system that they don't understand and is poorly suited for the economy in which we live.
anthony70 9 years, 9 months ago
Common sense tell you that if VAT come into effect Jan 1 ,2015 , how is it that Customs want to collect VAT from 2014 sales? Sound like Customs either is not educated on VAT or something fishy going on.
John 9 years, 9 months ago
Customs seem to be in a "do as they see fit mode." This being to the detriment of local businesses and importers. At LPIA customs officers were charging the old duty rates and adding the VAT on top of it! So some merchants found themselves paying an additional 12-15% tax on their imports. Then the officers were keeping the importers receipts and the customs cashier was issuing cash receipts without the customs or the customer's tin number on it. Yet Gestapo John Rolle in the press running on about how businesses will be fined for various infractions. If the government agency responsible for collecting VAt aint gat their act together yet on this VAt issue, how you gonna be threatening businesses what are trying to comply. John Rolle looking for promotion aye?
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