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TUESDAY, DECEMBER 14, 2021
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‘We’re not taking VAT change sitting down’ • Polymers fears for competitiveness, Bahamas presence • Manufacturer says ‘might as well be in US’ on status loss • GB Chamber chief urges Gov’t to ‘reverse’ VAT treatment
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A FREEPORT manufacturer yesterday warned its competitiveness will be undermined, and presence in The Bahamas endangered, by VAT reforms that have seemingly removed its ‘zero rated’ status. Greg Ebelhar, Polymers International’s chief operating
officer, told Tribune Business it is “not going to take this sitting down” given that the inability to recover, or offset, its VAT ‘input’ costs from January 1 will generate a significant cost increase for a business that operates on relatively thin margins. Disclosing that the company has been unable to-date to obtain clarity from the Department of Inland Revenue (DIR)
on whether its VAT ‘treatment’ has changed, he said it was working with its attorneys to determine the precise impact, but added: “If they keep adding taxes I might as well be in the US.” Mr Ebelhar, confirming that the loss of ‘zero rating’ status would threaten Polymers’ continued presence in The Bahamas, also bemoaned the lack of warning and consultation with the private sector before the reforms were introduced via the VAT (Amendment) (No.2) Bill. The Bill, which has been passed by both houses of Parliament and now awaits the Governor-General’s signature to become law, “came out of the dark”, Mr Ebelhar argued, while adding: “The ease of doing business did not get any easier”.
$5.44 The Davis administration has sought to reduce VAT ‘zero ratings’ and ‘exemptions’ to the bare minimum as part of its strategy to cut the levy to 10 percent, and revert to a lower rate, broad-based structure for the Government’s main revenue earner. However, when the last PLP government first introduced VAT at the then-7.5 percent, export activities - such as Polymers’ expandable polystyrene (EPS) products - were among the few to be ‘zero rated’ as a stimulus to what were viewed as valuable sources of foreign exchange earnings for The Bahamas. VAT ‘zero rating’ allows the recipients of such treatments to avoid having to charge the tax to their consumers, while also
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‘Don’t rest on laurels’ over yachting registry • Marina chief: Change ‘22%’ tax rate to compete • Says Bahamas losing out to Jamaica, Cayman • Nation already ‘losing edge’ gained in COVID By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas must reform its tax structure to become a competitive flag state for yachts, a marina operator urged yesterday, adding: “We cannot afford to rest on our laurels.” Peter Maury, the Association of Bahamas Marinas (ABM) president, told Tribune Business that many of the vessels spending “most of their time in The Bahamas” are flagged in rival Caribbean territories such as Jamaica and the Cayman Islands because they are deterred from using this nation. He explained that this was due to a taxation structure that levies “onetime” 10 percent duty, plus 12 percent VAT (soon to be 10 percent), on yachts and boats coming into The Bahamas to be registered. Few vessel owners, Mr Maury argued, wanted
to pay an effective 22 percent tax rate that would see $2.2m levied on a $10m boat. Asserting that this was money The Bahamas is not collecting anyway, the ABM principal instead argued that these taxes be eliminated in favour of, as an example, a $5,000 annual registration fee that would raise a collective $5m annually for the Public Treasury were 1,000 boats to be attracted to this nation’s flag. Mr Maury said the fiscal and economic benefits from establishing a more appealing yacht registry would extend to company incorporations and fees, as most yacht owners create companies to hold their vessels as a means to limit liabilities, creating additional work streams for the likes of attorneys and accountants. Bahamians, he added, could also start their own yacht charter broking
STENA ICEMAXX DRILL SHIP
Bahamas oil well creditors accept 84% debt hair-cut By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net CREDITORS owed a collective $11.3m for the drilling of an exploratory oil well in The Bahamas have agreed to accept a near-84 percent haircut on this debt, it was revealed yesterday. Challenger Energy Group, the former Bahamas Petroleum Company (BPC), in a statement to the capital markets said contractors, vendors and
• Agree $2m settlement on $11.3m owed • Quiet over licence renewals, Gov’t fees • ‘Top-up’ possible for Bahamas insurance others that provided services to facilitate the drilling of its Perseverance One well in waters 90 miles west of Andros have agreed to accept a $2m
settlement on what is collectively owed to them. “All remaining creditors from the drilling of the Perseverance One well in The Bahamas in
early 2021 (approximately $11.3m) have agreed to be settled for total payment of approximately $2m in cash, of which approximately $0.6m has been paid todate,” Challenger said. It added that “the remaining balance of approximately $1.4m [is] payable by January 31, 2022, to reduce the total of remaining Perseverance One creditors to nil. Payment of this remaining balance is to be funded from new capital to the
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‘Aggressively advance’ yacht registry, says AG
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By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
GREG LARODA
the import duty and VAT relief seen as vital to aiding rebuilding efforts will continue. “I think that one is very important,” he said of the Special Economic Recovery Zones’ continuation in Grand Bahama and Abaco. “I believe most persons on both Grand Bahama and Abaco are hoping it will be like a foregone conclusion. “We’re still in a situation where, because of the downturn in the economy, a lot of folks do not have the funds to take
THE Bahamas must “aggressively advance” the building of a yacht registry to capture a greater share of the business that passes through its waters annually, the attorney general said RYAN PINDER yesterday. Ryan Pinder, addressing the Senate on the Merchant Shipping Bill, argued that The Bahamas must exploit its maritime expertise and history to develop a registry attractive to a lucrative and rapidly expanding global market (see other article on Page 1B). “We as a country are global leaders in ship registration. Our flag is respected worldwide and envied by many. This experience and expertise must be advanced aggressively to build our yacht registry,” he asserted.
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KEN HUTTON
Gov’t ‘running out of time’ on extending Dorian relief By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Grand Bahama Chamber of Commerce’s president yesterday voiced concern that the Government is “running out of time” to clarify if the Dorian tax breaks will be extended beyond year-end. Greg Laroda told Tribune Business that December is almost “half-way gone” yet there has been no official confirmation by the Davis administration - despite repeated verbal assurances - that