By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday urged to “not bite off more than we can chew” on Value-Added Tax (VAT) enforcement, as blocking access to overseas e-commerce websites was simply not practical.

Gowon Bowe, the Tax Coalition’s co-chair, told Tribune Business that the feasibility of denying Bahamians access to overseas websites, by blocking local Internet Protocol (IP) addresses, was impossible.

He explained that denying access to foreign websites not registered to pay VAT in the Bahamas was something raised as an issue in talks between the Government and Coalition members, noting that US IP addresses, for example, were unable to log into UK-domiciled online betting sites.

“One of the elements that came up in dialogue with Coalition members is looking at foreign websites and blocking the IP addresses if they are not registered to do business and pay VAT,” Mr Bowe revealed.

Thankfully, this appears to have gained no traction, and Mr Bowe said that it would be impossible to prevent Bahamians purchasing goods on sites such as Amazon.com and have them shipped to the Bahamas. Thus 7.5 per cent VAT would only be incurred at the border, and not on the purchase price.

“Is it going to be possibly practical to police,” Mr Bowe said of the ‘website blocking’ proposal. “I think our primary focus should be on border control....... Let’s not bite off more than we can chew.”

The Coalition for Responsible Taxation co-chair suggested the Government should concentrate on VAT enforcement, and collecting what was due to it, within the Bahamas only.

This would offer the most efficient use of resources, and Mr Bowe, a PricewaterhouseCoopers (Bahamas) accountant and partner suggested it should not be concerned with offshore and international businesses as the Government would simply be unable to take enforcement action against them.

And, by the same token, Mr Bowe suggested that the Government should also abide by the Bahamian hotel and tourism industry’s wishes and not turn their overseas booking and travel agents into vassel VAT collectors.

“Booking agencies are throughout the US. Should that service be liable to pay VAT, and be responsible fort reporting it, remitting it and paying the Government?” he asked. “There are areas where the use of international companies is quite prevalent.....

“I can’t think of anyone other than the US where foreign businesses have to comply with tax laws imposed on them that are not imposed in their own countries.”

The Government, though, appears not to have taken this to heart, as the revised VAT Bill makes clear that hotel bookings and tour packages arranged by overseas travel agents/tour operators will have 7.5 per cent VAT levied on the commissions paid to the latter.

One tourism industry executive, speaking to whether the Government had addressed the industry’s VAT concerns, said: “Some of it seems to have been covered, not all of it, in terms of our concerns.”

The new VAT regulations also appear to have gone against the sector’s advice not to levy VAT on gratuities, resort levies and other fees, as these and any service charges are included in the value upon which the 7.5 per cent rate will be levied.

The revised Bill adds that hotel bookings “concluded before or after the coming into force of this Act are not subject to VAT until such time” as the repeal of the 10 per cent hotel/occupancy room tax.

The Bill, though, includes this repeal, meaning that VAT on hotel bookings will take effect once the Act is passed into law.

The Bahamas Hotel and Tourism Association’s (BHTA) main concerns were exempting Promotion Board levies, overseas advertising and mandatory gratuities/fees from VAT. Other issues are ensuring the tax is not levied on advanced group bookings and gross sales.