The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

BAHAMIAN insurers are ‘very close’ to having to having their concerns over Value Added Tax (VAT) refunds resolved, the chairman of the Bahamas Insurance Association (BIA) said yesterday.

Back in February, Bahamian insurers said they were at “loggerheads” with the government over VAT refunds, branding the situation “untenable” due to the impact on cash flow and solvency margins.

BIA chairman Warren Rolle told Tribune Business yesterday: “I think a major concern at that time was in respect to Value Added Tax which we were in negations with the government on. We are very close to having that issue resolved.

“We expect within the coming days, maybe a couple of weeks this matter will be behind us. It looks like it will be resolved to the satisfaction of everyone.”

As previously reported by Tribune Business insurers asserted that when VAT was implemented in 2015, representations were made by government officials - and details shared in guidance notes by the Department of Inland Revenue - indicating that general insurance claim settlements were deemed to be VAT inclusive.

“Insurers were therefore allowed these input tax deductions to be offset against VAT collected and payable to the government,” Mr Rolle said previously.

“It is noteworthy that insurers advised the government of the day that it was reasonably foreseeable that following a major catastrophic event, significant credits would be owed to insurers following settlement of claims.

“Nonetheless, the government maintained its position and the industry proceeded with its remittance to the government on the aforementioned basis.”

When Hurricane Matthew struck in 2016 it created insured losses in excess of $400m. Ultimately, the storm resulted in substantial credits being owed to insurers as ome continued to offset the input tax deductions while others sought refunds from the government.

General insurers, however, received assessments from the DIR indicating that a substantial portion of the input tax deduction, retroactive to 2015, is now disallowed as they were claimed on non-VAT registrants. Mr Rolle had described this as “a fundamental departure from the policy communicated to the industry and the practice that has persisted for several years, resulting in significant sums being allegedly owed to the government”.

Mr Rolle also noted yesterday that there is also concern among insurers over new regulatory requirements. “We have seen an increase in regulatory oversight. There are some new requirements our regulator are imposing that has caused some consternation among a number of member companies of the BIA. These are being addressed with the regulator and we hope again that at the end of the day these to will be resolved to the satisfaction of everyone,” said Mr Rolle.