Ministry of Finance Confirms Application of VAT
on Supplies of Services made between Grand Bahama Port Authority Licensees
Recent press reports purport to suggest that
there exists ambiguity as to the VAT treatment of supplies of services made in
the Port Area between Port licensees.
The
Ministry of Finance wishes to reaffirm that the VAT Act that was recently
passed by Parliament clearly sets out the VAT treatment of such supplies. Specifically, section 3.(3)(a) states that the
VAT Act does not apply where:
“a
supply of goods within the Port Area is made by a taxable person who is a Port
Licensee to another Port Licensee and the goods are of a kind and for a use
within the customs duties exemptions in clause 2 of Hawksbill”.
It is
to be noted, in this context, that the VAT Act excludes the application of VAT
specifically in the case of goods that are of a kind and for a use within the
customs duties exemptions of Hawksbill, thereby explicitly excluding services from
the non-application of VAT.
The Guidance Note on VAT and the Hawksbill Creek
Agreement that was recently issued by the Ministry of Finance provided further
clarification on this matter. In the
section entitled “What if I provide services to another Port licensee, will
they be subject to VAT?”, it is explained that:
“
Services
provided by a Port licensee are subject to the general VAT rules and therefore
services provided by one Port licensee to another Port licensee will be subject
to VAT”.
Of
course, such transactions will be subject to the general exemptions of services
that are provided in the Second Schedule of the VAT Act. Examples of such exemptions relate to the
provision of financial and insurance services.