By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Chamber of Commerce president yesterday slammed the penalties for missing tax payment deadlines as “outrageous”, revealing his business was fined almost $4,000 for being five minutes late with its VAT remittance for March.

Dionisio D’Aguilar told Tribune Business that a combination of the Easter holiday, and multiple other business transactions, resulted in him making Superwash’s $36,000 Value-Added Tax (VAT) payment five minutes after the March 29 midnight deadline.

Explaining the circumstances, Mr D’Aguilar said that while VAT payments are normally due by the 28th of every month, the Easter Monday holiday occupied that date for March. This pushed the deadline back to March 29, the next working day.

“On the 29th, I had a lot of payments to make,” the Superwash president said. “I reached my daily maximum of $100,000, and couldn’t make any more wire transfers.

“I wired my $36,000 in VAT just after midnight, when the new day started. The Government charged me a $3,600 penalty, and with 9.5 per cent interest on top, it was almost $4,000 just for being five minutes late.

“I’m just warning everyone that the penalties are humungous. It was almost $5,000 for being five minutes late. It’s absolutely outrageous to charge 10 per cent of the sum due. There should be a cap on that. And if you don’t pay it, they’re going to charge you another 5 per cent on that next month.

“I’m warning everybody that the 10 per cent penalty is extremely painful. In fact, I think it’s outrageous. The instant throwing out of penalties is maddening, confusing and getting people very upset.”

The financial penalty for both late VAT and Business Licence fee payments is 10 per cent of the principal dum due to the Public Treasury, plus interest at 9.5 per cent.

Mr D’Aguilar, though, argued that the ‘one size fits all offences’ penalty was disproportionate in the case of Superwash’s March VAT filing, adding that it was more appropriate for those companies that were 30 days late or chronic defaulters/late payers.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, yesterday suggested the situation needed to be “revisited” if Superwash and other businesses had been subjected to the full fine for being five minutes late.

He added that the Chamber, and its Coalition for Responsible Taxation, had previously agreed with the Government how to address the issues created by VAT payment deadlines falling on weekends and holidays.

Should that occur, Mr Sumner said the two parties had agreed that the deadline automatically became the next business/banking day.

Mr D’Aguilar, meanwhile, called for the Government to allow the private sector a “two-day grace period” after its VAT and Business Licence payment deadline dates, so that wire transfers made on the day could clear and be recorded by the Government.

“When we wire the funds, they have to come into the Government’s accounts, and someone has to take the information and put it into their system,” Mr D’Aguilar explained.

“By which time, you’ve gone past the payment deadline. Set a date, and allow two business days to clear these payments, so they don’t have all this confusion.

“The most efficient way to do it is to walk down there [the Inland Revenue Department] with a cheque, because they have to write it into their system. You’re trying to encourage e-commerce, and that just isn’t working.”

Mr Sumner said this issue, too, had been settled between the Chamber and the Government, with both agreeing that provided VAT registrants could show bank documents proving they sent the due tax by the payment deadline, no fines would be levied.

“If you can demonstrate that you’ve given instructions to the bank, that becomes the effective date and time of payment,” Mr Sumner said. “Businesses ought not be to be penalised for that.

“Wire transfers take a day or two before they clear. They system of bank remittances may not be instant. The Government should not be penalising for funds received several hours late.”

Mr D’Aguilar added that funds wired from the Bahamas to foreign banks seemed to clear more quickly than transactions between two Bahamas-based institutions.

He added that based on the penalties, companies with Business Licence fees of around $150,000, could face sanctions of $15,000 plus interest if they were mere hours late.

Tribune Business was last week told by several accountants that a danger” was created over Business Licence filings, when clients were told by the Inland Revenue Department not to pay their fees until their filing calculations had been reviewed and approved.

This threatened to cause some companies to miss the March 31 payment deadline, so accountants were advising their clients to make payments based on the calculated returns. Any adjustments could be made at a later date, once the filings were approved and submitted.

Confirming that Superwash experienced such a situation, Mr D’Aguilar said: “This [Business Licence] approval was late in coming.

“I think I had to wait for this thing to come back, then set up the payment for it.”