The Tribune

• Customs: 30 vehicles seized on SERZ abuse

• Most released as $435,889 recovered in taxes

• Four autos in custody; comptroller warns public

By FAY SIMMONS

Tribune Business Reporter 

jsimmons@tribunemedia.net

CUSTOMS top official yesterday revealed that unscrupulous importers pocketed monies provided by clients to pay Excise Tax on imported vehicles in a scheme that abused Dorian-related tax breaks.

Ralph Munroe, the agency’s comptroller, yesterday confirmed that 30 high-end vehicles have been seized in New Providence and two other islands as part of a probe into irregularities involving their importation under the Special Economic Recovery Zone (SERZ) Order that was intended to help Dorian-devastated residents and businesses in Abaco and Grand Bahama rebuild their lives.

He added that additional duty totalling $435,889.07 has been collected from owners of the seized vehicles, with only four still remaining in Customs’ custody. These have an outstanding balance of $200,000.02 owing in Excise Tax to the Public Treasury.

Mr Munroe said Customs was “satisfied” that, in most instances, the vehicle owners did not know their autos were imported using the SERZ Order tax concessions. Most had used the services of agents and importers clear the vehicles into The Bahamas, and were able to present proof they had paid the full price to agents inclusive of the necessary Excise Tax.

“We were satisfied, in most instances, that many of the owners had no knowledge that their vehicles were imported under concessions as they were able to provide proof of payment in full to the agent for the payment of all costs involved in the delivery of their vehicle, which included full revenue payment,” Mr Munroe said.

“While our investigation continues into possible actions against the agents involved, the owners themselves in several cases have intimated that they would be pursuing legal remedies for the refund of their money that was provided to their agents for the payment of Customs revenue.

“Where it was established that there was no culpability on the part of the owner, the outstanding revenue was collected on the vehicle and they were subsequently released.” Mr Munroe spoke out after the scheme, and evasion/loss of taxes, was exposed in the House of Assembly by former prime minster, Dr Hubert Minnis.

The Killarney MP told Tribune Business on Thursday that the Government has lost more than $1m in Excise Tax revenues on high-end vehicles through persons abusing tax breaks designed to aid post-Dorian recovery.

Tabling documents in the House of Assembly to back his allegations, he added that automobiles were being brought in Excise Tax and VAT-free even though the blanket, all-encompassing SERZ Order facilitating such relief had expired in December 2022.

The Davis administration is still providing concessions on a case-by-case basis to persons judged as requiring assistance to rebuild after the devastating Category Five hurricane, but Dr Minnis asserted that high-end vehicles - including brands such as Mercedes, BMW, Lexus and Land Rover - had been imported under the SERZ Order and then illegally shipped to islands not struck by Dorian.

Documents tabled by the former prime minister in the House list 41 imported vehicles upon which $1.008m in total revenues due to the Public Treasury could have been evaded. Dr Minnis added that many of the high-end vehicles imported via abuse of the Dorian SERZ Order have already been licensed by the Road Traffic Department and have the necessary plates.

Mr Munroe, though, maintained that while some unscrupulous persons had exploited the SERZ Order to evade paying due taxes, the majority of individuals that used the concessions were compliant with its requirements.

He said: “While there were persons who sought to circumvent the payment of revenue by illegitimate means, we ought not to allow that to overshadow the fact that by far the vast majority of persons who imported vehicles under the SERZ Order were in full compliance with import requirements.”

Mr Munroe added that some people using the SERZ orders got approval before they expired but were not able to purchase a vehicle for several years later as they were financially constrained in recovering from Hurricane Dorian.

The Customs chief warned Bahamians to ensure any agent or individual importing a vehicle on their behalf presents an original copy of the Customs declaration and payment receipt.

He said: “I would wish to provide this word of caution to all members of the public who seek to engage the services of an agent or other person in the acquisition of a vehicle from abroad or from someone locally, if I may add, especially a high end vehicle.

“Please ensure that the agent or broker provide you with an original copy of the Customs declaration and the Customs payment receipt which will reflect what they have paid.” Dr Minnis previously said the scale of the abuse and tax avoidance was likely greater than detailed in the documents he had obtained as cheaper vehicles were also likely involved.

“Cars are being brought in through Abaco and Grand Bahama, and some of them are coming directly here [New Providence] under the SERZ Order, which is illegal,” Dr Minnis said. “Customs is signing on it. The SERZ Order stopped over a year ago but they are still bringing them in. It’s still happening.... $1.08m is the duty on these high-end cars that has not been paid. That does not include the lower end cars.

“Many of these cars are already licensed. The documents I tabled show these cars have licence plates now. To get licence plates they have to show that duty has been paid, and there are some Customs officers on this list as having received cars after the SERZ Order expired.

“If a vehicle is licensed, it must be stamped by Customs officers and you have to present the vehicle identification slip. Officers have to stamp the vehicle identification slip.” Dr Minnis also challenged whether Dorian-related tax breaks were being abused in the importation of other goods such as expensive household appliances, furnishings and building materials.

Mr Munroe, meanwhile, said the Government’s outsourcing of Lynden Pindling International Airport’s (LPIA) air freight terminal to JDL will not undermine Customs’ ability to do its job. He explained that many ports of entry, such as the Nassau Cruise Port and the Arawak Cay port, are run by private firms but Customs still continues to fulfil its mandate at those sites.

He added: “We have Nassau Cruise Port, which is an area of Customs from time immemorial, and today it’s basically a private area, for the most part. It is not run by the Government of the Bahamas. Customs happens to still be there like Immigration, but its run by the Nassau Cruise Port.

“You go to Arawak Cay, you’ve got Arawak Port Development Company. One time it was just Customs there. Now you go there, we don’t run it. We basically are a tenant; we do the work.

“No different from what we’ve got at Lynden Pindling International Airport, we’ve got US customs there, Bahamian customs there. If you go into the departure section for the domestic area we are not there. We are in our area. We don’t run the entire airport; we just run Customs.”

Mr Munroe maintained that a private firm conducting cargo management at LPIA is no different from doing it at a sea port, and Customs will still be “in charge” of collecting revenue on behalf of the Government.

He said: “If you go to air freight, again, it is no different from a seaport. You’ve got an airport. It may be in the Government’s view that it’s better to have it run by some private concern.

“We’re down to Odyssey, which is private. We over at Nassau Jet Centre, that’s private. They do what they have to do and we do what we have to do. I don’t think it in any way impedes on what Customs is doing no more than what it impedes on what we’re doing in Arawak Cay or Prince George Wharf.

“Customs is still in charge of what it’s been doing. And the same thing up in Grand Bahama. If you go to Freeport Container Port, it’s Freeport’s container port, but Customs is there. We only deal with what we are supposed to be dealing with.”