The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

THE Opposition’s chairman yesterday argued that the Government is sending mixed messages over whether it views the Sandals resort chain as a “tax dodger” or “national hero”.

Dr Duane Sands told Tribune Business that the contrasting signals sent out by the Ministry of Finance and Department of Inland Revenue on one side, and the Ministry of Tourism, Investments and Aviation on the other, “make no sense” as he asserted: “I suspect there is far more to the Sandals / Beaches story than the immediate spin being put on it.”

Speaking out after a week in which it was revealed that the tax authorities are pursuing Sandals Emerald Bay for a combined $30.844m in unpaid VAT and Business Licence fees, only for the resort chain to reveal two days later that the same resort will temporarily close on August 15 to facilitate its $100m transformation into the Beaches brand, Dr Sands said: “They’ve managed to spin the Sandals story in a way that makes no sense.

“On the one hand you accuse the resort of being a tax dodger, yet on the other hand they are wonderful corporate partners doing the right thing for Exuma and the elimination of hundreds of jobs for an indefinite period of time is a good thing. It could be six to eight months, it could be more.

“It shows the right hand and the left hand don’t talk to each other. Tourism is clearly not talking to finance, because finance is framing Sandals and their proprietors as tax dodgers.... so much so that this thing is going to court. But the tourism minister says no, they are national heroes that the country needs, in to save the day. Which is it?” the Opposition chair continued.

“I suspect there is far more to the Sandals Beaches story than the immediate spin being put on it by the minister of tourism and Ministry of Tourism. There’s no way that you can say the loss of jobs for an uncertain period is a good thing for the economy of Exuma and the economy of The Bahamas, particularly when that resort is the largest engine

for that economy, directly and indirectly.”

Chester Cooper, deputy prime minister and also minister of tourism, investments and aviation, last week said Sandals will double its full-time Exuma workforce to 850 staff when the $100m transformation of its Emerald Bay property into the Beaches brand is complete.

Also Exuma’s MP, he said the existing resort will temporarily close on August 15 for between six to eight months to enable the necessary construction work and remodelling to take place. Asserting that some 400 workers will be employed during the construction phase, he added that the project will develop a much larger resort at the same location under the family-oriented Beaches brand.

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that Sandals should provide the existing 425-strong Emerald Bay workforce, of whom 200 hail from Exuma, with an “assurance” that they will be retained and brought back to work when the property re-opens as a Beaches-branded hotel.

Voicing concern that Sandals might elect to repeat what it did when it closed its Royal Bahamian property, terminating the existing workforce and hiring many new staff, Mr Ferguson suggested that the resort chain provide the Emerald Bay workers with training to prepare them for the re-opening along with financial assistance to help them make ends meet in the interim.

He added that the closure was occurring just as families were starting to prepare for the Back to School shopping season, raising questions over how staff will find the necessary financing. “No one is suggesting for a moment that a company ought not to upgrade its product and make its product more appealing to its clients. That’s not what we’re saying,” Mr Ferguson said.

“We’re saying it’s a small country. We have approximately 243,000 workers in The Bahamas. We’re saying that if the need becomes necessary to renovate, even in the absence of a union being there, meet with some of the key workers in the complex and say: ‘We’re not going to terminate you’.

This announcement came, though, just days after it was revealed that the same resort and its operating entity, Clearview Management, were embroiled in a dispute with the Bahamian tax authorities over $30.844m in allegedly unpaid taxes.

It is unclear whether the announcement was brought forward to distract from the tax dispute, although Sandals’ own release refers to an “acceleration of plans” relating to the Beaches expansion. Neither Mr Cooper nor Sandals referred at all to the tax dispute in their respective statements.

One possibility is that the matter has been settled with the resort chain agreeing to move forward with its Beaches plans, which it has harboured for almost a decade, in return for the sum owed being forgiven or heavily discounted.

Sandals is disputing assertions by the Bahamian tax authorities that its Emerald Bay resort only reported 40 percent of revenues earned as it defended its one-of-a- kind “business model”.

Melissa John, the Exuma hotel’s financial controller, in a September 8, 2023, letter to the Department of Inland Revenue (DIR) denied the property had failed to properly disclose “the true nature of transactions” which have sparked demands for $30.844m in allegedly unpaid VAT and Business Licence fees combined.

The Department’s audit findings, which covered six years between 2017 and 2022, claimed the tax arrears had arisen because Sandals Emerald Bay and its operator, Clearview Management Ltd, had under-reported gross revenue income for the period by more than $284m.

The dispute, according to documents filed with the Supreme Court, appears to result from the Sandals’ corporate structure and business model. All guest bookings and payments are made to the resort chain’s corporate parent, Sandals Resorts International 2000, and its third-party booking platform and sales agent, Unique Travel Corporation. Both these entities are domiciled in Panama.

Rather than funds flow up the corporate chain, from subsidiaries to parent company, in Sandals’ case the money trail appears to move in the opposite direction - from Sandals Resorts International 2000 to the resort where the relevant guest has booked their vacation.

The crux of the Department of Inland Revenue’s assessment, and eight-figure tax demand, is that Sandals Emerald Bay over that six-year period only declared the net income received from its parent and not the gross sum collectively paid by tourists to stay at the Exuma property. As a result, the resort both under-reported and underpaid VAT and Business Licence fees for that period.