By KHRISNA VIRGIL
Deputy Chief Reporter
kvirgil@tribunemedia.net
AMID persistent questions on whether the government should have amassed substantial stamp tax from the transfer of ownership of the Baha Mar resort, a noted industry professional yesterday called on the Christie administration to be more transparent in explaining the inner workings of the resort’s sale to quash concerns over the extent of the government’s involvement with $3.5bn development.
Before a decision on stamp duty is made, Chamber of Commerce and Employers Confederation Chairman Gowon Bowe told The Tribune that key details need to be clarified and the government should now prepare to be “very explanatory on a lot of the decisions” that have been made on Baha Mar.
On the face of it, while it may seem that stamp duty should come into play, Mr Bowe said it might not, given that this situation involved a transfer from one non-resident for exchange control purposes to another non-resident for the same reason.
But even so, he said, there are a lot of “legal manoeuvrings” that the government would have to disclose that could affect concessions, before anyone is able to speak about stamp tax.
Last week, the Office of the Prime Minister confirmed a Tribune Business report published earlier this month, which said that Deloitte & Touche receivers sold the resort to a special purpose vehicle (SPV) owned by the Export-Import Bank of China (CEXIM), the project’s $2.45 billion secured creditor.
Once Baha Mar has been completed under the ownership of the bank’s SPV, the “second” or final sale will occur, it was previously reported.
However, this revelation set in motion wide discourse about whether the government would ensure stamp tax is paid, especially at a time when Prime Minister Perry Christie’s hurricane tax suggestion sparked intense backlash. Since making the comments, the government moved a resolution in Parliament to borrow $150m for Hurricane Matthew and Hurricane Joaquin repairs.
“There are a number of factors that have to be considered and I think the details from the government have to be clear in terms of ultimately what is going to finally transpire as it relates to concessions to an ultimate buyer,” Mr Bowe said when contacted.
“I think the SPV that has been created is effectively for administrative purposes. The China Export-Import Bank, the secured creditor, effectively has now repossessed the assets.
“So this isn’t really a sale. I think the term sale is a bit misleading in that the bank did not buy it from themselves.”
“So when there is a transfer from one non-resident for exchange control purposes to another non-resident for exchange control purposes, stamp tax usually does not apply.
“We know very clearly the bank is a non-resident and the SPV is likely to be non-resident because of its beneficial ownership.”
He continued: “Now the anomaly to that is in the Bahamas, Bahamian real estate trumps that and so typically on the exchange between buyers whether they be foreign or domestic on Bahamians assets, real assets with the property, stamp tax applies.
“So there is what I would call a number of legal manoeuvrings that the government would have to disclose before we are able to read out concessions.
“If you look at this through a holistic point of view it is the property right now by being repossessed by the China EXIM Bank which is a transfer in beneficial ownership.
“Some would probably argue no because the developer at the time had taken out the loan and pledged the assets. But if the bank’s ultimate goal is to sell it then the question will remain whether the stamp tax transaction will take place in an ultimate sale or in a transfer. If the transfer is just a facilitation of a sale then there may be concessions granted.
“If the bank says I am going to run and operate it then that’s different. But if they are saying they are looking for a buyer and have taken possession to facilitate a completion and to clean all of the court quagmire, then in reality this is just a step to the process. I think the final element is the government will grant concessions to try and stimulate this.”
Edison Sumner, CEO of the Bahamas Chamber of Commerce and Employers’ Confederation, took basically the same view, agreeing that there should be stamp tax paid to the government, but insisting that the heads of agreement would have to be examined before a definite position is taken.
“It (stamp tax) should (be paid) because there are certain taxes that each sale incurs that are payable to the government,” Mr Sumner said.
“But before we even get to that discussion it will be important to understand what was in the heads of agreement.
“So it would be difficult to make that determination although I do agree that in a sale of such magnitude it should be revenue that is payable to the government.”
No Tax
One person, however, did take a definite position when asked about this matter.
Attorney Wayne Munroe, QC, who represents the Gaming Board, one of Baha Mar’s creditors, said at this point there should be no payment of stamp tax.
“No, because the conveyance to the SPV is owned by China Import-Export Bank. So why would they pay stamp tax for transferring something to themselves?
“Now at a point where the shares of this company are transferred to the eventual buyer then there will be a consideration of stamp duties. At that time I have no doubt that the purchaser will be seeking the same sort of concessions that you find in the 2011 heads of agreement and in the Atlantis heads of agreement,” Mr Munroe said.
Comments
sealice 8 years, 1 month ago
Munroe = still high on that PLP koolaid....
Well_mudda_take_sic 8 years, 1 month ago
All of this gobbledegook talk from Gowan Bowe and Wayne Munroe is misleading. The Stamp Tax Act was amended in 2005 to close many of the abusive loop holes that had existed up until that time. Whether the beneficial owner is resident or non-resident for exchange control, immigration or any other purpose is completely irrelevant. The only relevant factor is whether there has been any change in the ultimate beneficial ownership of the real property. As a result of the original Baha Mar developers being stripped of their beneficial ownerhip of the development (by instigation of the corrupt Christie-led PLP government), ownership of the property has changed and now rests with a company incorporated Hong Kong that is purportedly majority owned and controlled by the China Export-Import Bank. There is no publicly available record showing who actually owns the Hong Kong company. The manner in which this change of beneficial ownership was brought about should properly trigger the imposition of stamp tax on the transaction. The China Export-Import Bank did not take temporary possession of the property in order to sell it to a third party; it took outright fee simple title to the property which presumably has been or is in the process of being recorded here in the Bahamas. Yes, we all want to know just how much Christie's Chinese friends were able to extort from him to our detriment at a time when we are confronted with Christie's $150 million add-on to our national debt in the run up to the next general election, to be followed by post-election new "special taxes" no matter what the outcome of the election.
Reality_Check 8 years, 1 month ago
And to think Crooked Christie and his corrupt lackey James Smith would have us believe the China Export-Import Bank established an "ex gracia" fund out of which the partial settlement payments were recently made on a discriminate basis to certain Bahamian creditors only. What poppy cock! Crooked Christie's Chinese friends extorted him into giving up much much more of the Bahamian people's money (far in excess of the "ex-gracia" fund) by exploiting his maniacal ego and well known political vulnerability.
TalRussell 8 years, 1 month ago
Comrades! Is it possible for "QC" Wayne and Chamber of Commerce's Gowon to first brungs some clarity to the public, if millions dollars are still owing to the Peoples Public Treasury, by a mogul's name that no one should be too surprised if it pop's up again with Baha Mar and that Special Purpose Vehicle (SPV)?
Did the PLP government just decide to keep it secret from the public that they decided to just quash the millions of dollars they had once claimed remained unpaid by Phil Riffin?
The PLP government said Phil owned millions. Phil said he didn't owe the government anything. Can both be clarity right?
jus2cents 8 years, 1 month ago
Forget the Tax issue it is obvious the Bahamian people have been royally shafted again, this PLP / China free for all must stop.
We really need some serious independent forensic investigations of all the Bahamas Ministers PLP and FNM.
And investigate the China Export-Import Bank's dealings in other jurisdictions, guarantee we will see a pattern.
jus2cents 8 years, 1 month ago
A reminder-
NASSAU, Bahamas, Oct. 25, 2016 /PRNewswire/ -- BMD Holdings Ltd. today reported that it has sent the following letter to President Liu Liange of The Export-Import Bank of China ("CEXIM") regarding the fact it has not received a response to its superior proposal to buy The Baha Mar Resort from CEXIM's Perfect Luck Holding Limited special purpose vehicle.
The letter is as follows:
October 24, 2016
Mr. Liu Liange Vice Chairman, President The Export-Import Bank of China No. 30, Fu Xing Men Nei Street, Xicheng District Beijing, China 100031
Dear President Liu,
I sent you two weeks ago today a bona fide proposal to buy Baha Mar at a price superior to any offer "Perfect Luck" or CEXIM has received. As part of my offer, I also made clear that this proposal to acquire Baha Mar would result in, among other benefits, all substantiated Bahamian creditors being paid in full and all Baha Mar employees - both Bahamians and expats - being paid the monies they are owed. Bizarrely, CEXIM has not acknowledged receipt of my proposal, nor has anyone associated with either the bank, the Receivers, or "Perfect Luck", made contact with us.
It makes neither economic sense nor is it in the best interests for the future of Baha Mar, or The Bahamas, that not one of these related parties have engaged with us to discuss our proposal. It is indeed "extraordinary" that the entire sale to "Perfect Luck" has been an intricate fabrication. The fact that the Receivers were not able to find an arm's length buyer has nothing to do with the quality of the asset and everything to do with a process where bidders were not given information, and were forbidden to meet with stakeholders or to discuss the status of construction with any of the relevant parties. The fact that the Bahamian court signed off on the sale does not mean that a comprehensive and inclusive process was followed. It only means that your lawyers were able to craft a story sufficiently plausible for the bank to sell Baha Mar to itself and conduct a further sale of Baha Mar in even more secrecy.
Read more here.... http://www.prnewswire.com/news-releases…
DDK 8 years, 1 month ago
To actually steal a development of this magnitude from a developer, thinking there will be no repercussions, takes either mammoth brass ones or great stupidity, possibly both.
BahamaPundit 8 years, 1 month ago
The way these things go down is the Government agrees to not charge stamp tax, but the entity pays twenty million in legal fees. Thus, they encourage the transaction to proceed but the public treasury is robbed - the public money goes to legal fees. This is a type of money laundering and a reason why no government should be able to forgive stamp tax, because it encourages corruption. Further, how do we know that a PLP MP is not now an owner or shareholder of Baha Mar. Again, secrecy encourages corruption and should be avoided.
banker 8 years, 1 month ago
Not so fast, please. My understanding is that the SPV is owned by Perfect Luck Company incorporated in 2013 in Hong Kong. Is EXIM a secret shareholder? Does EXIM own Baha Mar now? Who are the directors of Perfect Luck? More clarity is definitely needed.
Well_mudda_take_sic 8 years, 1 month ago
The U.S. Embassy here in Nassau has a dossier in a red folder (presumably the colour is symbolic for Red China) that tells all there is to know about the sordid illegal secretive dealings to date behind Christie's wrongful de facto nationalization of the Baha Mar development for the benefit of his Chinese friends as well as himself and a select group of his most favoured elitist political cronies.
sheeprunner12 8 years, 1 month ago
What is there to clarify?????? .......... Is there a new Chinese owner???????
MonkeeDoo 8 years, 1 month ago
So a property ( Izmerlian ) that has been repossessed by a Mortgagor ( CEXIM BANK ) and sold to a third party (Perfect Luck ) would not be liable to stamp tax. ? So, FINCO can unload its repossessed portfolio free of stamp tax too then ? Maybe as long as the new buyers are Chinkeys. Or they use the same lawyer as the Chinkeys used.
BahamaPundit 8 years, 1 month ago
No. I believe the mortgagor has the right of sale only. If he wants to purchase the property himself, he has to pay stamp tax. The Revolution got it wrong today. Stamp tax should have been paid if the Exim Bank became the beneficial owner of the property and replaced Sarkis.
Naughtydread 8 years, 1 month ago
These PLP monkeys got to go.
BahamaPundit 8 years, 1 month ago
Follow the money Bahamas. If the PM is silent, follow the money. People do things for one reason: money. Now, one way to prosper from the Baha Mar fiasco would be for your, hypothetical, AG's Law Firm to represent Perfect Luck. Then charge Perfect Luck 40 million in legal fees for purchasing the property. Because you have removed 200 million in stamp tax, Perfect Luck has no problem paying 40 million in legal fees. Then you split the money with your AG. Each takes home 20 million and is happy. This is a hypothetical situation used to illustrate why secrecy should not be tolerated by a democracy.
Reality_Check 8 years, 1 month ago
Spot on! There are several other scenarios too under which the same defrauding of the Bahamian people can be achieved by Crooked Christie and his select group of elitist political friends and business cronies. Baltron "Bag Man" Bethel has perfected two other scenarios!
Well_mudda_take_sic 8 years, 1 month ago
Crooked Christie, Allyson Maynard-Gibson aka the Evil Wicked Witch and Baltron "Bag Man" Bethel must each know who exactly are the principals behind the Hong Kong company, Perfect Luck Holdings Limited, given all the concerns they have touted in the past from a public policy perspective about protecting our sovereignty when it comes to the ownership of such a large project of national interest as the Baha Mar development.
MonkeeDoo 8 years, 1 month ago
So all this shit is recorded outside the Bahamas ?
sheeprunner12 8 years, 1 month ago
CORRECTION ................ A CALL FOR THE IMPLOSION OF BAHAMAR
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