The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Chamber of Commerce’s president yesterday warned the government that “you cannot exclude Freeport” from its Hurricane Dorian Economic Recovery Zones. 

Gregory LaRoda backed the zones’ creation as a “good thing” for storm-ravaged east Grand Bahama and Abaco on the basis that “it should help to bring their health back”.

Yet he added: “It hopefully would encourage some activity, but as said already by others you cannot exclude Freeport from those types of incentives. Just moving around the Freeport area I see the devastation. They would think Freeport was not hit that hard, but a lot of them [businesses] are still closed due to flooding. Some are saying they are not even going to open any more.

“It has a big impact on employment. But the Prime Minister did say he is more aware of the issues in Freeport now from what I heard and understand now.”

Mr LaRoda continued: “The Chamber is now currently surveying businesses on the entire island to see to what extent they were affected, what’s their most basic needs, and to find out from them exactly what does the Government have to do for them.

“Then we will make suggestions to the Government as to what the business community are saying: What is their immediate need, and then report back to businesses on what else the Government can do for them specifically - to see how we can help them repair and re-open. We really need the help of the SME’s.”

Asked about his relationship with the Grand Bahama Port Authority (GBPA) and what they are doing for Grand Bahama businesses, Mr LaRoda said: “After Dorian I can’t speak to much. Prior to Dorian they were doing a lot for SMEs by giving breaks and some concessions for license fees; at one point they were giving exemptions for license fees up to a year.”

Some observers have suggested that Freeport was not included in the Economic Recovery Zones because they will seemingly function in a similar manner as the city does under the Hawksbill Creek Agreement, with businesses able to bring in goods ‘bonded’ or duty-free before selling them to other companies or residents of the disaster-hit areas to facilitate recovery efforts.

However, Tribune Business sources have questioned why Bahamian and expatriate homeowner residents of Freeport were not being given any tax breaks or incentives to aid their rebuilding efforts as a result of being excluded from the Economic Recovery Zones.

The benefits of Freeport’s ‘bonded goods’ regime are only targeted at businesses within the Port area, and are not available - or cannot be accessed - by residents for use outside a business. As a result, some suggested Freeport homeowners are being discriminated against in comparison to their counterparts in east Grand Bahama and Abaco.

The Prime Minister previously said the combined tax breaks and incentives package to stimulate recovery in the areas hardest hit by Dorian largely mirrors that employed for his Over-the-Hill revival initiative, although it goes beyond that in a bid to revive the real estate market so vital to Abaco’s economy.

A VAT credit of up to 50 percent upon the sale of all property in the Economic Recovery Zones will be permitted - a benefit that could be worth several million dollars to buyers and sellers of high-end property in Abaco and its cays.

To qualify for this credit, the sale must immediately be followed by substantial construction or enhancement to the property, or its use for significant commercial activity. The qualifying activity must begin within 75 days of the sale closing, be followed through the scheduled completion otherwise the full VAT sum becomes payable.

Elsewhere, real property tax will not be payable on all eligible properties that are reconstructed, restored or otherwise inhabitable by October 2020.

The Government, however, recognised that any real property tax breaks would solely apply to foreign real estate owners, as Bahamian-owned property in the Family Islands is not subject to this tax.

Rather than a blanket exemption, the Prime Minister announced in foreign land holders in Abaco, the Abaco cays and east Grand Bahama “may” be able to benefit from real property tax breaks only if their developed properties are up to standard or they are taking steps to getting them back up to standard.

While this is designed to aid the second home and vacation rental market, undeveloped properties owned by foreigners in the Economic Recovery Zones will not benefit from the real property tax exemption.

Elsewhere, the Government is establishing a $10m loan guarantee and equity financing facility that is targeted at micro, small and medium-sized (MSME) enterprises to either help them re-open or create new businesses. An applicant will be able to secure a maximum of $500,000.

Dr Minnis also foreshadowed the creation of a “one stop shop” for business assistance for Abaco and Grand Bahama, which will be charged with ending the bureaucracy and red tape facing businesses. It will be staffed by personnel from the Small Business Development Centre (SBDC), Bahamas Investment Authority, Ministry of Finance, Department of Inland Revenue, The Department of Environmental Health Services (DEHS) and Building Permits Unit.

Otherwise, the tax break and incentive package was largely predictable. It features duty-free and VAT ‘border’ free purchasing of all materials, fixtures and furniture, plus vehicles and equipment required for all business and residential reconstruction. It also extends to all domestic purchases of qualified items so that Bahamian wholesalers and distributors benefit, too.

Business license fees will be waived within the zones, while the availability of provisional business licences will enable entrepreneurs to start their operations within two business days. Businesses and companies taking advantage of these concessions will have to register with the Government as a means to prevent fraud, tax evasion and other abuses.

Dr Minnis said he is extending Freeport’s ‘bonded items’ facility to east Grand Bahama and the Abacos, in a bid to enable both Dorian victims and Bahamian businesses to benefit from the recovery effort. He pledged a five-day turnaround time for business licence applications.