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Tensions mount over web shop tax

Sears says AG not negotiating in good faith

Alfred Sears.

Legal tensions over the implementation of a sliding scale tax on the web shop industry are escalating, with attorney Alfred Sears yesterday accusing Attorney General Carl Bethel of failing to negotiate in good faith.

In a statement, Sears charged that Bethel seems committed to deepening an “unfair and inequitable” tax regime against web shop operators.

Last year the government announced a sliding scale tax and patron’s tax on the web shop industry, but web shop bosses took the government to court over the matter.

Sears, who represents Playtech Systems (Island Luck), along with attorney Wayne Munroe, who represents three web shops, met with Bethel last year in an attempt to reach an agreement over the taxes.

In an interview with The Tribune last week, Bethel reportedly said it is time for taxes to be collected from the industry, and the government is “ready to go to war”.

Sears said he found it curious that Bethel chose to “communicate with me through the media”.

“Playtech has sought to engage the attorney general in good faith settlement negotiations,” Sears said.

“We have sent a number of written settlement proposals to the attorney general, supported by opinions of leading international gaming experts, on December 24, 2018; November 13, 2018; [and] October 26, 2018.

“We have not received any substantive written response from, serious consideration of, or engagement by the attorney general on our clients’ settlement proposals.

“Does the honorable attorney general not appreciate the implications of his conduct in light of the undertaking that he gave to the Supreme Court?

“There are grave interests at stake in this matter, with profound implications for the public revenue, the sustainability of Bahamian-owned gaming enterprises and the security of over 3,000 full-time jobs of Bahamian citizens which require our careful and fair conduct.

“Concurrently, as the minister of finance claims that he and his team are working diligently to demonstrate [a] commitment to global standards in the financial services sector, the attorney general is boasting about going to war against Bahamian-owned gaming house licensees to protect the new, discriminatory gaming tax regime and put The Bahamas at further risk of being sanctioned for affording preferential treatment to foreign enterprises in the gaming sector.”

Last August, web shop operators filed an application in the Supreme Court seeking leave for judicial review of the government’s stamp tax on gaming patrons and the sliding scale gaming tax. They also sought an injunction against the taxes.

Following the application, the government agreed not to impose the taxes but rather seek to have further discussions with gaming house operators in a bid to iron out areas in dispute.

Sears said, “Rather than negotiating in good faith with gaming house operators, consistent with the undertaking that he gave to the Supreme Court, the attorney general seems committed to deepening this unfair, inequitable and preferential tax treatment of entities in the same sector.

“By aggressively pursuing the exorbitant sliding scale taxation structure on the domestic gaming industry, while widening the gap between domestic and foreign gaming operators, the attorney general is only compounding the ring-fencing in the gaming sector that the minister of finance is seeking to eliminate between foreign-owned financial institutions, such as banks, trust companies and [international business companies] IBCs.

“This contradiction in government’s tax policy will expose The Bahamas to continuing punitive sanctions as a low-tax jurisdiction and litigation by Bahamian gaming house operators.”