Financial Secretary
affirms VAT Guide explanation of exclusion VAT on sales of goods amongst
licensees of the Grand Bahama Port Authority
In a
presentation to the Grand Bahama Chamber of Commerce on September 10, the
Financial Secretary stated that sales of goods between licensees of the Grand
Bahama Port Authority would be subject
to VAT and that VAT would only be excluded based on the amounts that should
have been collected by Customs.
"I
want to clarify that this is not the case," he said. "The intended treatment of these
transactions is exactly as they are described in the Guidance Notes for the Port
Area and in the legislation. Sales of
these items between licensees, where they are considered consumables, are not
subject to VAT."
The
Financial Secretary went on to explain that "what the law does provide is
for licensees to apply for a refund of VAT already paid to Customs in cases
where licensees are supplied with goods shipped from elsewhere in The
Bahamas. This is because local suppliers
who operate outside the Port Area would not be required to distinguish amongst
the final VAT treatment that is afforded to end customers within The Bahamas.
They would charge the VAT whenever the law required such. As a consequence, and
in such circumstances, Port licensees would have to seek direct refunds from
the government."
Under
the VAT legislation, Port licensees are not required to pay VAT on goods that
are imported into Freeport, where these go directly into producing other goods
or services. The legislation treats
these as "non-consumables” within the meaning established by the Hawksbill
Creek agreement.
The
Financial Secretary also stated that “how licensees are treated in these cases
does not materially weaken Grand Bahama’s revenue potential. It does however reduce the amount of VAT
credits that would be claimed by licensees that are VAT registrants.”