By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s Value-Added Tax (VAT) Unit and Customs Department are at odds over the latter’s demand that Freeport businesses, who submitted December’s duty-paid entries after the New Year, charge the new 7.5 per cent levy on these sales.

Tribune Business can reveal that impacted Grand Bahama Port Authority (GBPA) licensees have been ‘caught in the middle’ of different interpretations by two different government agencies over how VAT should work.

And, with the January 15 deadline for licensees to pay due import tariffs, and have their reports accepted, fast approaching, those caught in this situation fear Customs may block future import shipments - further interrupting their business at a time when they can least afford it.

Larry Albury, Freeport Jetwash & Auto Mart’s general manager, confirmed to Tribune Business that his company was among those embroiled in this situation which remains unresolved.

“It is happening to businesses in Freeport,” he told this newspaper. “We put in our entries for duty-paid sales for the month of December, and they [Customs] came back and told us we had to pay 7.5 per cent VAT on our December sales.

“We told them those are 2014 sales, not 2015 sales. I have spoken to the VAT Unit quite a few times, and they said: ‘Don’t pay it’, but Customs is insisting we pay it.”

By demanding that VAT be paid on GBPA licensees’ December sales, Customs is effectively making the new tax retroactive to 2014 - despite it not being created in statute law until January 1, 2015.

Under Freeport’s ‘bonded goods’ regime, Port licensees have until the 15th of the following month to submit - and have accepted by Customs - a report on the previous period’s duty-paid sales.

These sales involve products acquired by non-GBPA licensees, with the vendor business applying the relevant duty and submitting this sum to Customs by the same deadline.

However, Customs is adopting the position that because the reports - and collected duties - were submitted after January 1, these sales should also attract the 7.5 per cent VAT on top. Yet the VAT Unit is saying ‘no’ - a stance that the impacted businesses are backing.

“We’re hoping they can work it out without interrupting our day-to-day business,” Mr Albury told Tribune Business of the two government agencies.

“As far as I’m concerned it’s a straightforward answer. These sales are 2014, and there’s no VAT on them.

“We’re hoping the two departments can address each other, talk to each other. It’s straightforward; it’s 2014 sales, not 2015 sales, and there’s no sales.”

Mr Albury said Freeport Jet Wash had attempted to provide Customs with December’s duty-paid entries, and payment, on the first business day of 2015.

Yet the agency had rejected this “quite a few times”, and there is less than one week left for Freeport Jetwash and others to meet the January 15 deadline to complete this process.

Customs has form for holding up companies’ import shipments at the border if there is a dispute between the two sides, an outcome that Mr Albury is keen to avoid.

“We don’t need any more interruptions to sales, when we’re trying to conduct business and trying to pay the bills,” he told Tribune Business.

“The close we get to the 15th, the more I’m going to be concerned about whether Customs is going to stop our shipments, entries coming in. I’ll cross that bridge when I get to it.

“My car sales with this VAT have gone out the roof. Cars are a luxury item, as some of them have gone up $4,000, $5,000 with this VAT.”

Mr Albury also confirmed that some Freeport businesses, anticipating the exact problems he is having with Customs and December 2014 entries, had submitted their reports and entries before January 1. Some even closed their doors on December 30 and 31 to accomplish this.

Stephen Albury, Car Quest’s principal, revealed to Tribune Business that his company had refused Customs’ demand to levy 7.5 per cent VAT on their December sales.

Confirming that his business was in the same situation as Freeport Jetwash, he said: “We’ve refused to pay it. They [Customs] have no grounds to charge it. If companies have a Taxpayer Identification Number (TIN), it’s up to the VAT people.”

Stephen Albury said his understanding was that the relevant government agencies were to meet on the issue in Nassau today, in a bid to resolve it by the week’s end.

“It’s impacting a lot of people,” he added. “We [Freeport Jetwash] and Car Quest have both refused to pay it because Customs has no grounds to charge it.

“They have no authority to charge it. Technically, if it’s not something owed to them, they can’t enforce that. But they’ll try.”

Stephen Albury indicated that he, too, was concerned that Customs might try to hold Car Quest’s future imports if the situation was not dealt with before January 15.

John Rolle, the Ministry of Finance’s financial secretary, could not be reached for comment.