By Fay Simmons

jsimmons@tribunemedia.net

Ten courier companies recently saw Customs temporarily halt clearance of their clients' imports, the Government's top tax official revealed yesterday, as part of a drive to recover $193m in total VAT arrears.

Shunda Strachan, the Department of Inland Revenue's acting comptroller, said the suspension was imposed to ensure the ten companies settled outstanding VAT payments due to the Government. Nine of the courier firms have made substantial payments on the arrears, which represent monies received from their clients to settle due import duty and VAT liabilities, and been allowed to resume business.

She said: “There's lots going on with the couriers. It's because we've noticed a trend where we know business is really heightened for the couriers. They're collecting more revenue, but we're not seeing that reflected in what they were remitting. So we did do an exercise where we halted shipments or, you know, we stopped the release of goods until some couriers kind of settled their accounts, especially VAT accounts.

"Some businesses ran on payment plans, which is fine. We are not here to put them out of business or any business. We're not here to stop any business, but really to promote business. But in doing so you just have to make sure that the revenue is being collected. So we did offer payment plans to some businesses that weren't able to come up with all of the monies that were owed to the Government.”

Ms Strachan continued: “We had probably about ten couriers that we kind of asked to hold on until they pay us our funds. And so we held their shipments for them to, you know, just remind them that to collect, you have to pay. And so all of those couriers, with probably the exception of one, were able to come and make arrangements - make substantial payments - which we were very happy for, and their businesses resumed.

"And so I wouldn't say that there is a great challenge any more in that particular industry. But, for sure, we are monitoring it very closely. And we will continue to monitor the businesses that are importing, and we are doing so in conjunction with the Bahamas Customs Department.”

Ms Strachan said that total VAT arrears owed to the Government currently stand at $193m, a figure that represents the collective sum due from all taxpayer registrants, and not just the courier companies. However, she revealed that he Department of Inland Revenue believes the true arrears total is much higher as there are VAT registrants collecting the 10 percent levy but not remitting the full amount to the Government.

And, more concerning to the tax authorities, is the "unknown" where companies are levying VAT on their customers even though they are not registered or permitted to collect the tax. These firms are instead illegally pocketing the 'tax' collected as their own revenues.

Pointing to the recent Harbour Island tax crackdown, which is expected to realise more than $3m for the Public Treasury, Ms Strachan explained: "Based on businesses that actually filed returns, the VAT arrears currently is at $193m. But again, I'm going to use the recent operation as an example. None of those taxpayers were filing VAT, and that is already at the $3m mark.

"So we know we tell you that our arrears is currently at $193m, but that's really, like I said, only those businesses that filed and the concern for us is the unknown. Those businesses that are operating, charging VAT, not filing, not declaring. So I don't really take that $193m as being real, right. It's what's on the books, but I noticed there's a lot more out there.”

Ms Strachan said the Department of Inland Revenue is also paying close attention to businesses that close down, owing significant unpaid tax liabilities to the Government, only for their principals to re-open a similar enterprise shortly thereafter that trades under a different name.

Warning that the agency will not tolerate continued tax evasion via such methods, she added: "Another concern was businesses closing, shutting down not having paid their taxes, and starting up again as something different - in the same nature, but maybe a different name.

"And so if you have a business that has been operational previously, and in previous years closed owing the Government a substantial amount in the millions of dollars, then reopened in that same nature, and is continuing on that trend, then it is a concern. It is something that we have to act on.

"And so, again, we will go through the fee offences. It is an offence not to remit the Government's revenue. And so we will be taking... really taking steps to collect. And those steps will include the powers that we have under the offences of the VAT Act," the Department of Inland Revenue chief continued.

"We will also be looking at the Proceeds of Crime Act. You have some businesses that may not only be operating in The Bahamas, but may have another business internationally. And that's also a concern, especially when you look at the timelines as to the establishment of those businesses in terms of when our taxes were not remitted.

"And if it is determined, and I think we're at the stage now, that any business is intentionally avoiding paying, especially VAT, that's an offence and we're not going to look the other way this time around. So if it is something that has happened before, if this is a repeat offense, meaning you have any business that has done this, or has been in this type of situation before where they may have shut their doors not remitting government's revenue, we will not allow that to happen again a second time”

Returning to the couriers, Ms Strachan said there are 176 home-based courier businesses and another 76 that operate from physical premises who are currently registered with the Department of Inland Revenue. She said “We have about 76 courier businesses that have storefronts. So you have about 76 courier businesses that applied for Business Licenses for a location other than home-based businesses, because we have another 176 home-based courier businesses.

"And I think over the past maybe three to four weeks, what we saw was businesses not really remitting, especially the VAT. That's the greatest concern in addition to the Business Licence and paying their Business Licence fees, but the concern was really on those businesses remitting the VAT amount.”