End to some SERZ concessions; others extended to 2021

Minister of State for Finance Senator Kwasi Thompson yesterday announced another extension of certain tax concessions within the Special Economic Recovery Zone (SERZ) order, which were set to expire on December 31.

The relief order for the Disaster Reconstruction Authority (Special Economic Recovery Zone) (Relief) Order, 2020, has now been extended to June 2021.

Following Hurricane Dorian last year, Grand Bahama and the Abaco Islands were designated SERZs, allowing tax breaks on imported goods in particular.

While Thompson acknowledged the hardships faced by residents and businesses still recovering from the devastating storm – that are now grappling with the impact of COVID-19 – he said the vulnerable state of the economy means that not all current SERZ measures would be continued.

As a result, he clarified that relief provisions from business licenses and real property taxes and from value-added tax (VAT) and import taxes on consumables, clothing, equipment and other replacement items other than those specified, will be discontinued on December 31.

“Certainly, we appreciate the views expressed by some that all current measures should be continued. That sentiment, however, had to be weighed against the reality of a very challenged fiscal situation brought about by the current economic reality,” Thompson said in the Senate yesterday.

“Nonetheless, the government is demonstrating that it is fully committed to supporting the ongoing Hurricane Dorian recovery process that continues within the SERZ. The work is not over and we plan on leaving no one behind.”

The tax breaks that will continue include those on fuel, household furniture and appliances, and the sale of property will continue into the second quarter of next year, Thompson said.

“We recognize the need for concessionary fuel pricing while the work to rebuild the power grid continues. For that reason, the local sale of fuel will continue to be tax-free, given the ongoing need to run portable generators as electricity restoration continues in some communities. We recognize that rebuilding takes time and the reconstruction of damaged homes continues. For that reason, the local sale and importation of household furniture, furnishings and appliances will continue to be tax-free,” he said.

“We recognize that many ordinary Bahamians are still looking to buy and sell properties for regular residential development. For that reason, we are extending the opportunity to receive a discount on the VAT payable on the sale of real property for transactions valued up to $500,000. We recognize as well that vehicles that have been ordered may not arrive in the country by the end of December. Accordingly, the government will honor the current tax concession on replacement vehicles, provided that there is documentary evidence that they have been shipped by December 31, 2020, and provided that they arrive by April 30, 2021.”

Thompson was appointed minister of state for finance earlier this week, following the resignation of former Deputy Prime Minister and Minister of Finance Peter Turnquest.

He said he intends to continue with the mandate left in place by his predecessor.

“As we navigate our way through these challenging times, the country remains in a vulnerable position. However, the timely and decisive actions of the government have helped the country to maintain fiscal stability, investor confidence and minimum levels of domestic consumption as we mitigate the economic fallout. The government’s prioritization of citizen welfare has meant a focus on feeding programs, income replacement, employment retention and small business development, even as we have had to cut back in many areas,” he said.

“The public can be assured that the government will continue to focus on these critical areas. As minister of state for finance, I intend to ensure that the revitalization, development and full recovery of Grand Bahama and the Family Islands, as a part of our national recovery strategy, are at the forefront. In addition, the use of innovation and new technologies will be prioritized to drive the expansion of our economy, including the government’s digital transformation, cashless initiatives, ease of doing business, digitization of the investment process, promotion of the digital economy and e-commerce development.”

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