The Tribune

By Natario McKenzie

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet minister yesterday confirmed the government will “explore its options” if it is unable to persuade the four web shop hold-outs to pay due taxes via negotiation.

Dionisio D’Aguilar, minister of tourism and aviation, who has responsibility for gaming, said: “We are collecting 76 percent of the revenue we are supposed to be collecting with the three that are left.

“This is a very frustrating process that we are going through, and I wish that we could bring it to a conclusion because it’s a major distraction. It’s in the hands of the lawyers and we will see where that takes us.”

In an interview with Tribune Business on Monday, Mr D’Aguilar had called for web shop hold-outs to “stop hiding behind the lawyers” and pay millions in taxes due under the industry’s mid-February settlement with the government. 

He said yesterday: “We should let that [negotiating] process play out and then government will explore its options if it’s not happy with the outcome. I don’t want to get into negotiating in the press and airing the intimate discussions that are going on, so let’s let that process play out and then we come back and inform the Bahamian people.”

Island Game, Paradise Game, Asure Win and the FML Group of Companies are understood to have taken the position that no retroactive taxes were owed for the 2018-2019 fiscal year’s first half.

Under the mid-February settlement agreement, so-called “back taxes” for the first half of the 2018-2019 fiscal year - from July 1-December 31, 2018 - were to be levied at the old web shop taxation rate of 11 percent of gaming revenues. This was replaced by the new “sliding scale” operator tax, and its new rates of 15 percent and 17 percent, with effect from January 1, 2019.

But Tribune Business revealed last month that Paradise Games and Asure Win had paid taxes due for July 2018 and then stopped, while FML and Island Game had yet to pay anything at that point.

The quartet are basing their case on the fact that the old taxation structure, which required web shops to pay the greater of 11 percent of taxable revenue or 25 percent of earnings before interest, taxation, depreciation and amortisation (EBITDA), was repealed when the 2018-2019 budget was passed at end-June 2018.

Their attorney, Wayne Munroe QC, told this newspaper in late December 2018 that, as a result of that repeal and the attorney general’s previous undertaking not to enforce the new regime after the industry took the matter before the Supreme Court, no taxes were due or owing by the sector for the first six months of the current fiscal year.

However, it is understood the government believes it has a solid legal position to demand the payment of retroactive or “back” taxes under the settlement agreement’s terms by virtue of the Interpretation and Clauses Act’s section 22.

This allows a repealed law, such as the old 11 percent taxation structure, to remain “in force” until the one replacing it takes full effect. “Where any written law repeals in whole or in part any other written law, and substitutes other provisions therefore, the repealed written law shall remain in force until the substituted provisions come into operation,” the Act states.