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Last Updated: Feb 13, 2017 - 1:45:37 AM |
GBPA Addresses VAT and the Interpretation of Tax-Free Concessions in the Hawksbill Creek Agreement
By The Grand Bahama Port Authority
Oct 3, 2014 - 2:03:35 PM
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 Freeport Grand Bahama - The Grand Bahama Port Authority is grateful that the new VAT legislation upholds the provisions of clause 2 (1) of the Hawksbill Creek Agreement whereby goods to be used for business activities and which are supplied by one Licensee to another Licensee or imported into the Port Area from outside The Bahamas are free of VAT. Additionally, further exemptions and zero-rating per international practices are most reassuring for development in Freeport.
Naturally there are many complexities. Both the Government and GBPA separately have sought further advice to address ongoing concerns regarding the latest VAT Bill and the provisions of Clause 2 of the Hawksbill Creek Agreement.
In the Opinion of Leading UK Counsel, an expert on VAT engaged by the GBPA, the approach which has been adopted in the VAT Bill in relation to activities in the Port Area does not align in a number of respects with the concessions granted to The Grand Bahama Port Authority and to Licensees in the Hawksbill Creek Agreement. In particular, Clause 2 (8) of the Hawksbill Creek Agreement should render goods, services, licence fees, and likely rent, beyond the scope of VAT.
Clause 2(8) is a pivotal provision in the recognition of the Port Area as a tax-free economic zone, in that it states that, for a specified time, “no taxes of any kind shall be levied upon the earnings of the Port Authority in the Port Area and outside [The Bahamas] or upon or against the earnings of a Licensee in the Port Area and outside [The Bahamas].”
Based on the advice received, the GBPA is satisfied that goods and services supplied by a Port Licensee together with Licence fees paid to the Port Authority and rent which form part of the turnover of a Port Licensee, fall into the category of tax-free concessions granted under the Hawksbill Creek Agreement and accordingly should not attract VAT.
The Grand Bahama Port Authority is in discussion with the Bahamas Government and with the business community to ensure that the interpretation of tax-free concessions in the Hawksbill Creek Agreement are agreed, and implemented smoothly within the community.
© Copyright 2014 by thebahamasweekly.com
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