The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Customs’ top official yesterday pledged to “vigorously pursue” persons smuggling alcohol or selling it without the permission of Bahamian companies who have sole local distribution rights.

Ralph Munroe, the agency’s comptroller, said it had received complaints from unnamed distributors that “there are a lot of products on the Bahamian market they have sole distributorship for that they are not responsible for selling to the public”.

Addressing the first media briefing by the Prime Minister’s Office for 2023, he warned those selling beer, wines and/or spirits illicitly to “cease and desist” given that they were violating the brand exclusivity and intellectual property rights of those Bahamian companies who own them.

“Those persons who have run afoul of the law, and may have imported them whether they were smuggled or whether they did so simply without permission, because it is an intellectual property that the sole distributor has, we’re saying to them to cease and desist and that is an area that Customs are going to pursue vigorously,” Mr Munroe pledged.

Confirming that Bahamas-based distributors believe there are “a lot of” beer and hard liquors being sold locally that were not sourced through legitimate channels, the Comptroller added: “We’re not saying that duty hasn’t been paid. We’re saying that persons who have [own] intellectual property, they have a right to guard that. They’ve paid for it; it’s their property, and as a department we have a duty to protect it.

“All persons who may have run afoul of the law in that regard, we are putting you on notice that the Customs Department is coming after you. We are a country of laws.”

Established Bahamian beer and liquor manufacturers and distributors, such as Commonwealth Brewery and Bahamian Brewery and Beverage Company, as well as their affiliates, have long regarded the so-called ‘grey’ or parallel market for such products as undermining their business.

Commonwealth Brewery, in unveiling its initial public offering (IPO) in 2011, estimated that the ‘grey’ market accounted for some 15 percent of all alcohol sold and consumed in The Bahamas. The country’s proximity to the US, as well as its multiple ports of entry, facilitate the smuggling of such products. They are also often imported for private parties.

Mr Munroe yesterday said it was hard to prove claims that some ‘grey’ market product was counterfeit, adding: “You may suspect it but how do you prove it” without proper chemical testing and analysis.

Meanwhile, Shunda Strachan, the Department of Inland Revenue’s acting controller, told the same briefing that delinquent real property tax payers face a 40 percent increase in their bills if these have to be passed to a private collections agency to make good on.

Confirming that several such companies, including some based overseas, have been hired for collections work, she added that while they were “making some headway” in cutting into hundreds of millions of dollars in real property tax arrears there was not sufficient progress to report yet.

“A lot of accounts have been outsourced to private collection. That adds an additional 40 percent on to your tax bill. If persons have not been paying they will meet with enforcement action,” Ms Strachan warned, with collections activity “especially” targeting foreign-owned property.

“One of the changes in the July legislation was to really allow the Department [of Inland Revenue] to be able to exercise its power of sale over more than foreign-owned vacant land,” she said. “We now have the power to exercise power of sale over all property other than Bahamian-owned and occupied property. That’s major. That’s one thing coming down the pipeline.

“We’re doing a lot of things this year that we’ve not done before. It’s really been focusing on our revenue targets and ensuring revenue due to the Bahamian people comes in. We’ve been working with the banks. They’ve been very helpful, and have been starting to pay real property tax with clients that have not been paying. We’re doing a lot of things differently. Garnishing is coming.”

Ms Strachan affirmed that the Department of Inland Revenue “won’t hold your Business Licence up” if a company is a tenant of a landlord who is delinquent on their real property tax payments. Tribune Business revealed earlier this month that all businesses must provide the real property tax assessment number for the building from which they operate, even if they are merely tenants, otherwise their Business Licence renewal may be delayed.

Responding to concerns that landlords are refusing to provide tenants with assessment numbers, the Department of Inland Revenue chief said businesses could instead submit the location of their premises and landlord’s name.

However, she did not directly address concerns that “garnishing” a tenant’s rental payments to pay off their landlord’s property tax arrears would place the former in potential breach of their lease agreement. This would result from the rental payment going to the Government rather than the landlord.

The joint objective of the Ministry of Finance and Department of Inland Revenue is two-fold - to boost both Business Licence and real property tax revenue. By better matching business tenants to their commercial landlords, the tax authorities’ goal is to detect those among the latter who lack the necessary Business Licence for the activities they are conducting and thus clamp down on such tax dodging.

While companies have been assured that their landlord’s existing real property tax arrears will not impact Business Licence renewals, the strategy is also designed to provide the Department of Inland Revenue with information enabling it to “garnish” the tenant’s rental payments and thereby use these to pay-off debt owed to the Public Treasury by the building’s owner.