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Courier firms blocked on ‘seven figure’ tax arrears

• Several suffer import halt on Treasury debt

• One confirms ‘issues’ with clearing goods

• Top official hits out over ‘repeat offenders’


Tribune Business Editor

Several courier companies have been temporarily barred from clearing imported shipments over their failure to pay up to “seven figures” in due taxes to the Government, a top official confirmed last night.

Simon Wilson, the Ministry of Finance’s financial secretary, described the situation with the industry as “an ongoing problem” given that operators can quickly build up substantial tax arrears due to the high volume of goods they are clearing on a daily basis.

Given that couriers are effectively monies provided by their clients to pay due taxes on trust, he told Tribune Business the Ministry of Finance and Department of Inland Revenue “don’t look very favourably” on those who either fail to pay in full, on time or are guilty of both offences. 

Describing some firms as “repeat offenders”, Mr Wilson did not identify the culprits, or give specific figures for the sums involved, but told this newspaper the arrears accumulated by individual couriers before a block was placed on their activities has run into “seven figures” or millions of dollars. 

Pledging that the tax authorities will “work through it” to ensure all couriers come into compliance with their obligations, he added that the halt imposed on their activities until they become current typically never lasts more than “a day or two” because their operations are otherwise completely shut down and they stand to lose clients, their reputation and, potentially, go out of business.

Asked by Tribune Business to confirm whether several courier companies have recently suffered Customs-imposed halts to clearance of their clients’ import shipments, Mr Wilson replied: “I think that’s correct. If they owe taxes they are collecting in trust we will hold their shipments until they pay it. It’s probably a variety of things, and this is one of them.”

All courier companies were mandated by the Department of Inland Revenue to produce a Tax Compliance Certificate, showing they are current with VAT, import tariffs and other taxes, by March 13, so the recent crackdown could also be related in part to the failure of some to obtain the required paperwork by that deadline as well as pay what is owed to the Public Treasury.

Tribune Business contacted Mr Wilson after being informed that several courier companies were recently barred from importing goods into The Bahamas on their clients’ behalf. One, whose name this newspaper is withholding for legal reasons, was alleged to owe the Customs Department nearly $300,000 in unpaid taxes. It was warned by the authorities that it had to pay the full amount before it would be allowed to resume normal operations.

This directive was said to have been issued by Ralph Munroe, Customs comptroller, acting on instructions from Mr Wilson. Tribune Business was told that Mr Munroe was in a meeting when it called for comment, and was directed to speak with Mr Wilson instead.

Meanwhile, the floor supervisor at the courier said to have owed $300,000 did confirm it had encountered “issues” with importing goods for clients over the past two weeks. However, senior management has said nothing about the matter, and the firm has resumed shipment clearance as of yesterday. Well-placed sources, speaking on condition of anonymity, said customers had been complaining they had shipments that were due and could not get them.

Mr Wilson yesterday said Customs and the Government are focused on treating tax-compliant courier companies “fairly and quickly”. He indicated that non-payment of taxes by operators in this sector was especially egregious since it did not involve their own money but, rather, funds that have been provided to them by clients to clear shipments and pay their due obligations to the Public Treasury.

“They’re not remitting taxes,” the financial secretary said of the offenders. “Our concerns really with courier companies are that if you are collecting a sum of money from the client, and that sum of money is for Customs duty on whatever is imported, and you don’t pay the Government out of that sum......

“You have a Customs bond, and you are collecting money in trust. You’re collecting money on behalf of the Government from a client, and you don’t pay that money to the Government in a reasonable period of time. We don’t look at that very favourably. We don’t. Then, in some cases, some companies are repeat offenders.

“It is an ongoing problem. We’ll work through it. Hopefully these companies will be in compliance pretty soon and things will work out. In some cases it can be substantial amounts and that’s a concern.” When asked whether the tax arrears owed by individual courier companies was as high as six figures, Mr Wilson replied: “Seven figures, not six. Seven figures. In some cases it can be very substantial amounts.”

This implies that firms can build up tax debts worth millions of dollars. However, while the Government’s ability to effectively shut the culprits down usually ensures it collects what is due, delayed payments impact its cash flow and also increase the possibility that some taxes may go missing or not be paid.

“These are high volume companies,” Mr Wilson told Tribune Business of the couriers, “and if they don’t focus on making timely remittances these arrears can run up pretty quickly.” Asked how quickly offenders responded to being shut down, he added: “I think it would be fair to say that most companies immediately afterwards make the payment. The halt is never more than a couple of days or a day or so. It would be unusual for a halt to be more than a day. Very, very unusual.”

Asked what was required to improve compliance, the financial secretary said: “Better enforcement. I think it comes down to better education and enforcement with these couriers. If you don’t pay attention it can run up very quickly. It’s a high volume business. You can be lax, and not pay attention, and before you know it you can have a pretty significant sum outstanding to the Government. Nobody intends to do it, but if you don’t pay attention it can blow right up.”