TCI News

Premier sets record straight, no write offs, beneficiaries revealed

#TurksandCaicosIslands – March 7, 2019

On February 18th, the following Bills were read in the House of Assembly for the first time and it was publicly announced that the Debate would take place on March 4th and 5th :

The Hotel Tourism and Restaurant Taxation Bill (HRTT) which provided an overhaul to the Law passed since 1985 allowing for a modernization of the law and a strengthening of the collection of taxes;

The HRTT (Amnesty) Bill which allowed for an Amnesty commencing April 1st and allowing for a waiver of all penalties and payable on any outstanding taxes due and payable under the Hotel, Restaurant and Tourism (Taxation) Ordinance for the years up to and including the year ending 31 March 2019.

The HRTT (Validation) Bill which sought to ratify past actions.

Regrettably not all persons were able to hear the Debate in the House of Assembly where three serving former Ministers quite adequately shared their thoughts on why we were where we are today.

Of particular concern was the Amnesty Bill that offers relief to 41 local and expatriate owned Businesses. I offer again the following facts as stated during the Debate:

There has been NO WRITE OFF OF TAXES for any Business.

Financial Implications

There are currently 41 establishments that are in arrears position of which 7 have been refferred to AG Chambers, 15 have paid the entire principal amount but not the interest (not accruing), and 19 have made no payments. (interest accruing).

Of the 19 businesses, Beaches TCI and Club Med collectively account for 96% of the amount outstanding. Should these businesses opt to benefit from the Amnesty, $28,638,820 of principal will be collected and $85,191,912 in interest will be forfeited.

Total amounts in arrear of principal and interest are $29,684,123 and $89,147,690 respectively as at January 31, 2019.

On the matter of Beaches, three former Ministers of Finance currently serving correctly summed up the situation as it relates to Beaches. Hon Derek Taylor spoke to the fact that the actions should be considered for what it is: a cleaning up exercise; Hon Royal Robinson offered that it was a matter that the issue has run on so long and now the “chickens have come home to roost and certain adjustments must be made” and Hon Washington Misick stated that he believe that this was a genuine oversight by all Governments: PDM and PNP since 1997. I agree with all save for the fact  that I have every reason to believe that the immediate past Minister of Finance had knowledge of this matter and in fact his Party has issued a Release saying that he commissioned the Audit that revealed the Findings. The Audit covered September 2014 – August 2016 and it revealed that though Beaches and successive Governments operated on the understanding that it should pay 60% of the 12% tax, there was no written evidence save a letter written by Hon Washington Misick in 2014 confirming this to be the practise. Despite the findings revealing the oversight on the part of all successive governments, my Government has requested the payment of the full 100% of taxes for this period. I wish to thank the Revenue Control Unit for its work. In addition I wish to assure the public that Beaches and Club Med continues to pay its monthly taxes before the statutory deadline.

As it relates to Club Med, who since its opening has been allowed to pay 40% of the 12% tax under a Development Agreement. This Development Agreement has since expired and the former Administration had continued to collect under the same rate under the expired Agreement.

To this end, the Revenue Control Unit had to asssess both establishments on 100% and this is the matter before us.

Only Penalties are proposed to be written off. Penalties under the current Ordinance calculates monthly at 10% compounded. For an amount outstanding of $29,684,123, the total penalties are $89,147, 690. To be clear all businesses owing under this Audit are now attracting 240% in interest/penalty on the original taxes owed. As an example if a business owes $10,000 in taxes, it now attracts a penalty/interest of $38,000.00 for the Audit period. While penalties have been put in place to deter late payments, we believe the rate of 10% compounded monthly was too onerous and have reduced the rate and how it is calculated going forward under the new Ordinance passed on Monday.

I wish to confirm that local businesses will benefit under this Amnesty. Despite there being no request by the Opposition for a list of proposed beneficiaries, I now release the list of businesses that stand to benefit under the Amnesty Program and encourage them to take advantage of the offer that allows payment plans for up to 2 years. I appeal especially to locally owned businesses that have popular standing. We are more than happy to be able to provide such an opportunity.

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