The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has dropped demands for Bahamian importers to supply proof of exchange control approval for each Customs entry following an outcry from furious businesses.

Marlon Johnson, pictured, the Ministry of Finance's acting financial secretary, told Tribune Business that the Customs Department had "modified" requirements it was set to impose from this Monday, May 14.

A "public notice", signed by Dr Geannine Moss, the Customs comptroller, stated: "The public is hereby advised that as of the 14th of May 2018, all commercial entries submitted to Bahamas Customs must be submitted with current Business Licence."

Dr Moss said such requirements were enshrined in law by the Customs Management Act's section 208 (2), "item nine", which states that "goods imported for the purpose of any business" can only be cleared by production of a valid Business Licence and "proof that exchange control approval was obtained by the importer from the Central Bank of the Bahamas permitting the expenditure of foreign currency for the purchase of the goods".

Customs' demands yesterday provoked a backlash from the private sector, who argued that the extra bureaucracy and 'red tape' it would create ran contrary to the Government's efforts to improve the 'ease of doing business'.

Businesses told Tribune Business they had never been asked previously to supply proof of Central Bank foreign exchange control approval to accompany each Customs entry, and warned that the proposal threatened to slow down the cross-border commerce on which the Bahamian economy heavily relies.

Mr Johnson, responding to the concerns, yesterday said Customs would not be proceeding with the exchange control approval requirement.

However, he said the 'valid Business Licence' demand would remain given that it was a critical tax enforcement measure, helping to match import volumes to a certain company and then cross-check this against filed Value-Added Tax (VAT) returns.

The Financial Secretary said Customs also had concerns about several recent "large transactions" that could be involved in tax evasion and fraud schemes, with the Business Licence requirement seen as vital to both prevent and detect such crimes.

"We had some discussions about that internally, and we've modified the requirements to take away the foreign exchange element of it," Mr Johnson told Tribune Business of Customs' public notice.

"On the Business Licence side, it's something that Customs are checking periodically to make sure persons transacting business do have a valid Business Licence. We want to make sure people are licensed to conduct business, and it helps in tracking data to tie a particular business back to a particular transaction.

"We want to ensure the transactions coming through are valid. It's really important in the VAT environment. The entries people put in at Customs indicate the volume of business they are conducting, and help us evaluate their VAT returns."

Mr Johnson acknowledged private sector frustrations at the continued paper-based system, and failure to link government departments and agencies - especially those involved in revenue collection and enforcement - through technology so as to eliminate the need to produce documents such as Business Licences with every transaction.

"Over time, we want it to become electronic as part of the whole 'ease of business', so that we do these things digitally," he conceded.

The Financial Secretary then identified several recent transactions that had aroused Customs' suspicions. While not identifying them, he said the Department was concerned some had been structured to disguise the true importer's identity - possibly in a bid to lower their VAT and other tax bills.

"The reality they are facing now is they have seen some transactions that give them pause," Mr Johnson disclosed. "So Customs is taking some steps to do extra enforcement that will get streamlined as they gain confidence the transactions were legitimate.

"They have information and intelligence that people transacting large transactions are not properly licensed, or businesses are trying to shield themselves and go through someone else. This helps us in enforcement and preventing fraud."

He added that the Government remained fully committed to improving the 'ease of doing business', and said: "That's the delicate balance. We are still marching fully-fledged ahead with the ease of business initiative.

"There's no back tracking there, but there are steps we have to take to periodically make sure persons transacting and transacting fully above board."

Businessmen yesterday said Customs' demand for foreign exchange control approval proof would have partially reversed the Central Bank's liberalisation efforts, which include the ability for Bahamian companies to hold US dollar-denominated accounts domestically.

Rick Lowe, Nassau Motor Company's (NMC) operations manager/director, told Tribune Business that Customs had never previously asked his company for such documentation on any of its auto and parts-related imports.

Disclosing that he first became aware of Customs' plans when NMC's courier forwarded the public notice to him, Mr Lowe said: "We don't go to the Central Bank. We send in our invoices for payment by the [commercial] bank.

"Bahamians are now authorised to operate US dollar bank accounts. They release the burden of Central Bank approval on one hand, and on the other increase it."

Mr Lowe said NMC also supplied Customs with a copy of its valid Business Licence every year, questioning why the agency needed it to be supplied with every import transaction.

"It doesn't make sense," he told Tribune Business. "If they have a copy of the Business Licence, why do they need it for every single entry?

"It's supposed to be the 'ease of doing business'.... It's just another cog in the wheel."

Mr Lowe also queried why the Department of Inland Revenue was requiring companies to submit three months' worth of Customs entries when conducting tax audits, arguing that these were all available electronically in Customs' system.

"It's just a burdensome nightmare," he added.