The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods has pledged to “vigorously contest” the Government’s demand that it produce nearly $1m in “unpaid” VAT related to Grand Bahama’s port-Hurricane Dorian economic recovery zone (SERZ).

The BISX-listed food retail and franchise group operator, unveiling its results for the second quarter and half-year to end-October 2023, told shareholders that it will “initiate a formal dispute” against the Department of Inland Revenue’s (DIR) assessment.

To trigger the appeal, the Solomon’s and Cost Right operator said in notes to the financial statements that it will have to either place a bond or make full payment of the $925,732 in arrears claimed by the tax authority. It plans to make this payment by this Wednesday, December 20.

“On November 21, 2023, the company was issued a formal and final levy from the Department of Inland Revenue concerning alleged unpaid taxes totalling $925,732 which related to VAT outstanding for items sold VAT-free in Grand Bahama during the period of January 1, 2019, through December 31, 2021, under the SERZ order,” AML Foods said.

“The company, with the assistance of legal counsel, intends to initiate a formal dispute against the Department of Inland Revenue related to this assessment. To comply with the appeals process, the company will be required to place a bond or provide full payment of the outstanding liability, which the company intends to make on or before December 20, 2023.

“This payment will be made without waiving any rights in the ongoing dispute, and the company intends to vigorously contest the assessment.” AML Foods said it has made no provision in its financials yet for this potential tax liability as it works to determine the likelihood of its appeal succeeding.

AML Foods provided no details on what the Department of Inland Revenue is using as the basis to justify its claim for unpaid VAT. The dates in its statement do not precisely align with the SERZ’s creation, as it was only set up post-September 2018 to help Grand Bahama recover from Hurricane Dorian, whereas the BISX-listed group says the claim started from January 1 that year.

The period in question, though, relates almost entirely to the Minnis administration’s time in office and to the SERZ orders it would have implemented. These effectively made Grand Bahama and Abaco tax-free zones to facilitate post-Dorian reconstruction and rebound.

However, under the Davis administration, both the Ministry of Finance and Department of Inland Revenue voiced concern that the Dorian tax breaks regime is open to abuse by unscrupulous persons who use it to import items VAT and duty-free despite not qualifying for the concessions or living in non-impacted islands.

They have also indicated the Government is giving away too much in tax breaks to wealthy second homeowners who can afford to rebuild without such help - especially when it is enduring its own fiscal crisis. The Government argued that continuing the blanket SERZ tax breaks was not “the right tool” to achieve the best outcome for all concerned.