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‘Business is subject to pay duty if there is no bonded warehouse’

‘Business is subject to pay duty if there is no bonded warehouse’

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A business is subject to pay duty on merchandise, if they do not make use of a bonded warehouse.{{more}}

This point was highlighted by Prime Minister Dr Ralph Gonsalves yesterday, while speaking at a press conference, in relation to the issue of VAT and duties payable on outboard engines, which has been highlighted in the media recently.

In the May 9 issue of the SEARCHLIGHT newspaper, it was reported that owner of KP Marine and Howard’s Marine Keith Howard was not pleased with the manner in which he was treated recently, when he unsuccessfully attempted to clear two outboard engines, Value Added Tax (VAT) free from customs. Howard indicated that prior to this incident, clearing engines 75 hp or less, VAT free, had been his practice for years.

“I read what Mr Howard said, that he used to get duty free concessions and the Government stop him. But Mr Howard used to get duty free concessions when he had a bond,” Gonsalves explained.

The Prime Minister indicated that some businesses, such as those that import engines and motor vehicles, must operate a bonded warehouse.

Similarly, Gonsalves noted that Howard had his bond to bring in and sell engines to fishermen, who would get duty free concessions, once it was verified that the individual was in fact a fisherman. He further stressed that if the person buying the engine was not a fisherman and they were purchasing the engine for their pleasure craft, then payment of duty is required.

Engines of 75 hp or less are VAT exempt and exempt of duty, once they are to be used exclusively in the fishing industry.

“Interestingly, he (Howard) said he gave up the bond. Well, if you gave up the bond, at the very moment when you gave up the bond, you should not be having anything duty free coming out of the bond, because you don’t have a bond. So as soon as you import, you pay the duty,” the Prime Minister said.

However, in an interview with SEARCHLIGHT yesterday, Howard said he never kept engines of 75 hp or less in his bond when he operated it.

“What we used to do is bring the engine in general and have them in stock. So, if a fisherman comes in now to buy an engine, we just sell him the engine. He doesn’t have to pay VAT. His engine is VAT free. So, we give him a VAT free bill,” the businessman said.

“I only could [have] stocked the engines 75 horse power and down. Anything below 75 horse- power, I would stock them, because those engines are VAT free.”

Howard added that when he imported engines over 75 horse- power, he would pay the VAT.

He said when he was operating the bonded warehouse, he sometimes stocked engines over 75 hp. If one of those engines was sold locally, he would pay the VAT, but if the engine was sold overseas, no VAT would be paid.

“That was the reason for the bonded warehouse,” he said.

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