TUESDAY,
Sandals rejects accusations it hid 60% of resort’s revenue
By NEIL HARTNELL
THE Opposition’s leader yesterday urged Sandals and the Government to address “rumblings” that the resort chain may soon close its Emerald Bay property to convert it into its Beaches brand.
Michael Pintard told Tribune Business that he also wanted to understand whether these plans, and a possible temporary closure, may be impacted in any way by the ongoing dispute Sandals has with the Department of Inland Revenue over the latter’s demand for it to pay a combined $30.844m in total tax arrears (see other article on Page 1B).
Voicing concern about the dispute’s potential
impact on the wider Exuma economy, given that the Emerald Bay resort is the island’s so-called ‘anchor’ resort property and major employer, he also called on the Davis administration to explain how such a large unpaid tax debt had been allowed to build-up across three administrations.
By NEIL HARTNELL Tribune Business Editor
SANDALS is disputing assertions by the Bahamian tax authorities that its Emerald Bay resort only reported 40 percent of revenues earned as it defended its one-of-a-kind “business model”.
Melissa John, the Exuma hotel’s financial controller, in a September 8, 2023, letter to the Department of Inland Revenue (DIR) denied the property had failed to properly disclose “the true nature of transactions” which have sparked
“We have been hearing rumblings about Sandals for a period of time closing and transitioning, in terms of its operations, into a different brand,” Mr Pintard told this newspaper.
“This would be a good time for Sandals officials and the Government to comment publicly on whether this rumour is accurate and, in the same context, to indicate whether these considerations are affected in any way by the demand for payment” of allegedly unpaid taxes. Sandals is disputing that any VAT or Business Licence fee payments remain outstanding.
Mr Pintard, though, is not the only person hearing change is potentially afoot at Emerald Bay. One well-placed tourism source, speaking on
• DIR: Emerald Bay earnings $284m more than reported
• Exuma hotel denies hiding ‘true nature of transactions’
• Resort chain: Our business model unique to Bahamas
condition of anonymity, said yesterday that while no formal announcement has been made to staff, employees are talking about a temporary closure coming as early as October 2024 to facilitate the transition from Sandals to a Beaches brand and operating model.
“They [staff] said they intend to close the hotel in October and do a twoyear conversion from the Sandals model to the Beaches model,” the contact disclosed. Tribune Business was unable to reach Jeremy Mutton, Sandals Emerald Bay’s general manager, for comment before press time last night while a statement from the resort chain’s corporate
More tourism ‘uplift’ to beat low 2% growth
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Bahamas must rapidly expand tourism capacity if it to beat predictions of “low 2 percent range” economic growth for 2024, the Central Bank’s governor said yesterday.
John Rolle, speaking at the banking regulator’s quarterly economic briefing, signalled in response to Tribune Business questions that bringing new room inventory into
service so that this nation can accommodate greater stopover demand and visitor numbers will be key to the country’s near-term growth prospects. With economic output having fully rebounded from the devastation inflicted by the COVID19 pandemic, he added that gross domestic product (GDP) growth is continuing to moderate back towards its long-run average of between 1-2 percent unless The Bahamas unlocks more tourism “uplift”.
“The forecast that I’ve seen in various worksheets has the projected growth for 2024 under 3 percent and closer to 2 percent. The low 2 percent range is what I’ve seen in some of the forecast, but again the upside potential depends on how we can really optimise the performance of the tourism sector,” Mr Rolle said.
“Part of the sector, we still have room for uplift, capacity-related uplift.
That’s really important to stress in terms of what the 2024 outlook could
resemble.” Robert Sands, the Bahamas Hotel and Tourism Association’s president, has previously said between 1,000 to 1,500 hotel rooms in this nation have been taken out of available inventory and are now offline.
The demolition of the former Melia Nassau Beach Resort, and its 694 rooms, together with the continued closure of Atlantis’ Beach Towers, has deprived New Providence alone of more than 1,000
Corporate income tax release at ‘any week’
THE Attorney General yesterday revealed that the ‘white paper’ on corporate income tax reform is set to be reviewed by Cabinet “any week” before being released for public consultation. The confirmation from Ryan Pinder KC came as the Opposition began to question the delay and
lateness in releasing the next phase of corporate income tax consultation. Kwasi Thompson, the Opposition finance spokesman, yesterday simply asked: “Where is the corporate tax legislation?” The Government had previously said the ‘white paper’ and draft legislation for the Qualified Domestic Minimum Top-Up Tax (QDMTT), which is to be levied on all Bahamasbased companies that are part of corporate groups
with an annual turnover exceeding 750m euros, would be released after the 2024-2025 Budget to allow for review and consultation over the summer.
The intent was to debate the legislation when Parliament returns from its summer recess in the fall, with Prime Minister Philip Davis KC stating: “Our objective is to present the draft legislation at the conclusion of the Budget
demands for $30.844m in allegedly unpaid VAT and Business Licence fees combined.
The Department’s audit findings, which covered six years between 2017 and 2022, claimed the tax arrears had arisen because Sandals Emerald Bay and its operator, Clearview Management Ltd, had under-reported gross revenue income for the period by more than $284m.
The dispute, according to documents filed with the Supreme Court, appears to result from the Sandals’ corporate structure and business model. All guest bookings and payments are made to the resort chain’s corporate parent, Sandals Resorts International 2000, and its third-party booking platform and sales agent, Unique Travel Corporation. Both these entities are domiciled in Panama.
Rather than funds flow up the corporate chain, from subsidiaries to parent company, in Sandals’ case the money trail appears to move in the opposite direction - from
IT meltdown must not ‘scare away’ digital payment usage
By NEIL HARTNELL Tribune Business Editor
BAHAMIANS must not be “scared away” from digital payments benefits by the recent global IT meltdown, the Central Bank’s governor argued yesterday, as he unveiled plans for local card transaction continuity.
While giving no details, Mr Rolle said in response to a Tribune Business question: “We shouldn’t view the global IT setback as justification for any pull back in terms of the benefits that we can get from digitisation.
“I think what it does for us in The Bahamas is that it reminds all of our businesses that even in the best of times you need to have a very robust recovery plan in your business operations and, as well, your activity in terms of your payment space and how you manage
John Rolle, speaking at the banking regulator’s regular quarterly press conference, said the problems caused by CrowdStrike’s faulty development and installation of cyber security upgrades - which knocked out up to eight million computers worldwide - should not be used “as justification for any pull back” on the digital payments drive. He then revealed that, as part of the Central Bank’s drive to move The Bahamas to “a real-time fast payment system” within the next two years, it is looking to develop local digital infrastructure that will enable credit and debut card transactions to still complete even if international processors go down as occurred with the CrowdStrike fiasco.
SANDALS EMERALD BAY
MICHAEL PINTARD
JOHN ROLLE
RYAN PINDER KC
Central Bank lists projects to create hundreds of jobs
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Central Bank yesterday outlined several upcoming investment projects including a $300m outlay that will create more than 500 jobs on New Providence.
The banking regulator, unveiling its half-year economic briefing, said the developer behind this project is an entity called Pleasure Play Ltd although no further details such as nature of investment, location and beneficial owners/ investor identities were provided.
An entity called East Coast Aviation Bahamas was identified as planning “an infrastructural development project in the capital valued at $89m”, while the Bonefish Lodge and Land Company was said to be aiming to invest $7.4m into a project billed as creating 60 new jobs on Exuma. And Green Point Holdings is eyeing a $177m Abaco development that will generate 400 jobs, 350 of which will go to Bahamians. No further details were provided for any of these investments.
John Rolle, the Central Bank’s governor, said demand for foreign currency fell by 2.6 percent during the 2024 first half due to reduced spending on oil imports and fewer credit card and other transactions. Foreign exchange inflows had also eased as the economy reverted to more moderate growth following the post-COVID recovery with bank purchases from
the private sector rising by a more modest 2.2 percent.
“The foreign exchange market indicators underscore that even with the post-recovery moderation in the speed of economic growth, the net retention of foreign currency in the external reserves was greater in the first half of this year,” Mr Rolle said.
“Inflow moderation was evident from a more constrained increase in commercial banks’ purchases of foreign currency from the private sector of 2.2 percent during the first half of 2024, compared to a rise of 3.5 percent in 2023.
“However, at the same time, demand for foreign exchange [as] seen in commercial banks’ sales fell by 2.6 percent over this period given moderated outlays for oil imports and reduced outflows on credit cards and related transactions,” the Governor added.
“As a result, the commercial banks’ net sale of foreign exchange to the Central Bank was over
50 percent greater than in 2023 at just over $400m through June 2024. The Government sector was also a net contributor to the reserves build-up of more than $150m in this period, which was in contrast to a net usage of external balances of over $200m in 2023.”
Turning to the impact on the external reserves, Mr Rolle said: “Given these transactions, the external reserves grew by approximately $580m through the end of June. This contrasted with an improvement of around only $100m in 2023. Over June and towards the end of July, the reserves fluctuated at around $2.9bn so this marked the seasonal peak of external reserves for 2024.
“On a seasonal basis, the Central Bank still anticipates the customary reduction in the external balances over the second half of the year. In addition, as stronger credit trends stimulate more spending in the economy, it is forecasted
Corporate income tax release at ‘any week’
FROM PAGE B1
debate in order to initiate the process of public consultation.” However, that deadline has been missed as it is almost one month since the Budget took effect on July 1.
The implementation of the corporate tax will be the first such income-based levy in the country’s history, and is intended to ensure The Bahamas complies and fulfils its obligations as one of 140 countries that have signed on to the G-20/ Organisation for Economic Co-Operation and Development (OECD) drive for a minimum 15 percent global corporate tax.
Mr Davis previously signalled his administration is seeking to ensure it loses none of the forecast net $140m in new revenues that will be generated while avoiding the imposition of “retroactive” taxation.
Confirming that domestic Bahamian companies which fall below the 750m euro threshold, or are not part of multinational groups that qualify, will not be impacted, the Prime Minister said: “This is a tax that affects only multinational enterprises earning more than 750m euros annually.
“We are talking about very, very big companies.
The QDMTT is a way to make sure these very big companies pay at least a minimum amount in taxes on their profits in every country where they do business. The implementation of [the OECD’s] Pillar Two in The Bahamas would unlock a new revenue source, with initial estimates expected to exceed more than $140m annually.”
Mr Davis explained that failing to implement the minimum corporate tax would effectively mean The Bahamas handing over the right to collect taxes on economic activity within its jurisdiction to other countries.
“May I add here, Madam Speaker, that if we do not implement this Pillar Two tax on that multinational entity that is doing business in The Bahamas; if we don’t collect it here, they’ll
MORE TOURISM ‘UPLIFT’ TO BEAT LOW 2% GROWTH
that balances could end the year below the levels at which they closed out 2023, which would be a good signal of the extent to which we are seeing a pickup in local demand in our economy.”
As for the banking sector, Mr Rolle said: “For the year to-date, on the lending side commercial banks’ lending to the private sector rose at double the pace of 2023. However, the increase was still just a modest $74m. This reflected growth across all major components: Mortgages, consumer loans and business lending. At this point last year, only the commercial loan portion was expanding.
“In the meantime, commercial banks also continued to experience a reduction in the average private sector loan delinquency rate. The non-performing loans rate, which measures this, or the fraction of loans that were three months or more behind in payments, fell close to 6 percent as of June 2024 from an arrears rate of almost 7.5 percent at the same point in 2023.
“Given the very healthy outlook for the external reserves, and the accumulated liquidity within the system, the Central Bank’s monetary policy position will remain accommodative to increased private sector lending. Along with moderately faster expansion in private sector credit, the Central Bank also expects greater capacity within the system to fund more of the Government’s debt operations in local currency.”
rooms. Chester Cooper, deputy prime minister and minister of tourism, aviation and investments, has previously unveiled ambitions to double hotel room inventory by 15,000 within a decade.
Mr Rolle, meanwhile, said the outlook for the Bahamian economy had become more favourable as inflation rates globally continue to decline. “Some risks to the outlook have also subsided,” he said. “Although still decreasing towards its target range in most major economies, inflation is more under control and this is further positioning major central banks to further reduce interest rates from their recent highs.
“Despite ongoing uncertainty about when this process will fully conclude, the overhang from high interest rates is already subsiding. In addition, there is less of a risk of a short-term recession in output or correction of the magnitude that could seriously hinder tourism demand or frustrate the ease of funding foreign investment flows.”
As for the economy’s likely GDP growth, the Governor added: “The pace of economic growth is still being tempered from the post-pandemic highs. However, the 2024 expansion is expected to retain some above average momentum as a result of the aggressive marketing campaigns for tourism and residual pentup demand for travel.
economy continued to expand at a healthy pace. Although the speed of growth has moderated since the completion of the recovery from the pandemic, activity remained slightly accelerated in comparison to the economy’s expected medium-term potential,” Mr Rolle continued.
“This reflects strong gains in tourism, including in the most important stopover segment, and sustained foreign investment inflows still significantly targeting tourism developments and residential real estate.... The outcome also remained positive for employment, including through construction activities.
“In the meantime, the inflation rate further subsided as the pass-though from higher prices on imported goods and services receded. In addition, monetary and credit trends reflected additional improvement in credit quality and modest firming in the pace of lending to the private sector.”
Turning to the tourism industry, Mr Rolle said: “Indications are that earnings maintained a healthy growth pattern. In the highyielding stopover segment, the data on air arrivals departures through Nassau International Airport, and vacation rental activity, all point to improvements up through May and June of 2024.
have to pay that same tax in their home jurisdiction, and many of the multinationals doing business here prefer to pay us,” the Prime Minister said.
“We ought not to allow that opportunity to pas because they have to pay it anyhow. Why should they not pay it in the jurisdiction in which they are operating? We are thankful for our collaboration with those in this space...”
Mr Thompson, meanwhile, yesterday called for the Davis administration to announce the date for the VAT holiday on backto-school purchases and an implementation of a VAT holiday on hurricane supplies.
He said: “We are one month away from back-toschool and the Government has once again failed to announce the back-toschool VAT holiday. These are the initiatives that will help Bahamians. In addition, we are already well into the hurricane season and the Government has once again not mentioned the VAT holiday on hurricane supplies.”
Mr Thompson also questioned why the Davis administration has not produced a fiscal surplus for the 2024-2025 fiscal year as stated in its 2022 Fiscal Strategy Report, and accused it of “keeping secrets” about the current fiscal deficit.
He said: “The Government clearly stated in its 2022 Fiscal Strategy Report that the Budget 20242025 should have a $287m surplus. It was clear and unambiguous. The Government, without justification and without explanation, brought forth a Budget with a $69 million deficit. Why? They are still keeping secrets.
“The law that this PLP administration brought to Parliament – the Public Finance Management Act - states that they are legally required to provide a justification. They have still not done so. They have also made a mockery of the fiscal laws of the country by ignoring them without explanation.
“The Public Finance Management Act states that the Government must state the ‘reasons for any deviations from the general principles, fiscal responsibility principles, and fiscal objectives in the previous fiscal strategy report’.”
Mr Thompson added:
“Despite what the Government says, the truth and the numbers do not lie. They have abandoned their
surplus target for this year. Total revenue is behind projections. Tell the Bahamian people what were the final revenue numbers and how far below the target they came. Total VAT collection was behind. What were the final VAT numbers and how far behind were they?
“Bahamians are not feeling the benefits of higher Customs fees. The business community has been under attack by high inflation, and harsh and unjustified Government tactics that only hurt businesses. Where is the hope and help?”
“The Bahamas also retains upside potential from ongoing investments to increase cruise destination capacity and from stopover accommodations that are still anticipated to be restored in parts of the country. Over the mediumterm such outcomes are expected to provide steady benefits for employment and further improved public finance trends.
“Based on the latest data through the first half of 2024, the Bahamian
“Air arrivals strengthened on a year-to-date basis but, as expected, were significantly moderated from their 2023 pace, which still featured a very strong recovery component. In the vacation rental segment, performance gains were reflected in increased room night sales on an expanded inventory of available listings throughout The Bahamas.
“As well, indications are that average pricing for vacation rental units were also higher than in the previous year. The cruise segment of the market also experienced healthy outcomes.”
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CENTRAL BANK OF THE BAHAMAS
Sandals rejects accusations it hid 60% of resort’s revenue
Sandals Resorts International 2000 to the resort where the relevant guest has booked their vacation.
The crux of the Department of Inland Revenue’s assessment, and eightfigure tax demand, is that Sandals Emerald Bay over that six-year period only declared the net income received from its parent and not the gross sum collectively paid by tourists to stay at the Exuma property.
As a result, the resort both under-reported and underpaid VAT and Business Licence fees for that period.
“The total taxable supplies that were reported by Clearview Management were based on the net amount paid.. by Sandals Resorts International 2000 and not on the amount paid by clients to stay at the Sandals Emerald Bay resort,” the Department of Inland Revenue asserted in a July 20, 2023, letter to the hotel’s operator.
“Our position is that the taxable supply made by Clearview Management is the amount charged to the client for the room without any deductions for fees and/or services charged by related parties.” The Department of Inland Revenue is thus arguing that “taxable supplies”, upon which the amount of VAT due is calculated, should be based on Emerald Bay’s gross - not net - income.
Arguing that Sandals Emerald Bay had breached the VAT Act by making “a false or misleading statement” in filing incorrect returns, the Department of Inland Revenue added: “In filing the returns for Clearview Management, you have reported taxable supplies of $190.768m compared to the calculated revenue of $474.919m.
FROM PAGE B1
the recoverability of payments whenever there are disruptions.”
Acknowledging the need to further strengthen the domestic Bahamian payments system against similar future meltdowns, the Governor added: “One of the things the experience did not fully draw out, but is also on the radar of the Central Bank, is the need to strengthen the domestic payments capacity of the country if there are any setbacks internationally.
“So, to that extent, we continue to look at how we can transition The Bahamas over the next two tears, and not much longer than that, to what we consider to be a real time fast payment system but particularly an infrastructure where, even
“You have only reported 40 percent of the revenue actually earned during the audit period. You have done this by reporting the net amount of income you receive from your parent company, Sandals Resorts International 2000, instead of reporting the gross amount of income received and then deducting the amounts withheld as expenses.
“In addition, you have made a false or misleading statement by reporting the net amount of income and not disclosing the true nature of the transactions.” These assertions, though, were rejected in their entirety by Sandals Emerald Bay’s reply on September 8, 2023. Ms John, in her letter to Shunda Strachan, the Department of Inland Revenue’s acting controller, retorted: “Clearview Management has reported 100 percent of the gross income it has received from Sandals Resorts International 2000. We dispute the calculated revenue and the fact you estimate we have only reported 40 percent of the revenue earned.
“At no time have we made an omission, a false or misleading statement. In the conversations and correspondence with the Department of Inland Revenue, we have been open in how the Sandals business model works, which is different to other hotels which operate in The Bahamas. The income reported in [by] Clearview Management is the income it has earned.”
Both the Government and Sandals were tightlipped on the tax dispute yesterday. Michael Halkitis, minister of economic affairs, and Ryan Pinder KC, the attorney general, declined to comment on the matter, the latter saying: “I
don’t comment on active matters before the courts.”
Simon Wilson, the Ministry of Finance’s financial secretary, could not be contacted for comment and did not respond to messages, while Mrs Strachan, the Department of Inland Revenue’s acting controller, also could not be reached.
Department of Inland Revenue sources hinted that they were aware of the Sandals matter but said no more.
Tribune Business also reached out to Jeremy Mutton, Sandals Emerald Bay’s general manager, and was told by the resort’s spokesperson that Sandals’ corporate office would issue a statement on the tax dispute. However, no statement was received before press time last night.
The dispute is now before the Supreme Court after Sandals Emerald Bay’s operator filed a Judicial Review challenge in midJanuary 2024 as part of a two-pronged counter to the Department of Inland Revenue’s demands.
One aspect involves challenging the sum demanded, which is for $29.101m in VAT, $1.688m in Business Licence fees, and the “maximum” possible penalty under the VAT Act of $570,000, before the Tax Appeals Commission.
The other angle, which is the subject of the Judicial Review, is the demand by the Ministry of Finance and Department of Inland Revenue that Sandals lodge a $30.844m cash bond - equal to the disputed tax sum - so that the appeal to the Tax Commission can proceed.
The VAT Act’s section 81 (s) (c) stipulates that any challenge to a Department of Inland Revenue tax assessment must be “accompanied by payment of the total amount of tax assessed, or security
for card payments, they can be routed and processed within entirely the local payments loop.
“That will add to the sort of resilience and back-up we will have in the system, but not that we should allow the experience of the previous week to in any way scare people away from taking full advantage of the offerings from the digital platforms when those platforms are up and available.”
Mr Rolle then confirmed the Central Bank has agreed to participate in the “pilot” that could lead to the creation of a Caribbean regional payments system similar to the panAfrican version that exists.
“There is intended to be a pilot, a regional pilot,” he explained. “At this point the Central Bank of The
PINTARD: TACKLE ‘RUMBLINGS’ OVER EMERALD BAY’S FUTURE
FROM PAGE B1
office on the tax dispute did not materialise.
However, Sandals’ desire to develop a Beaches property at Emerald Bay has been no secret, emerging as a discussion topic at various times over the past decade. Well-placed sources, speaking on condition of anonymity because they were not authorised to speak publicly, said this plan was proposed to the Minnis administration but it was put-off by the extent of the tax breaks sought.
“Sandals are very aggressive in their negotiations with government. When you negotiate with Sandals, they don’t take prisoners,” one contact said. “They wanted to convert it to a Beaches. They have a lot of property down there which is not used.
“They wanted to exchange the Sandals flag for Beaches because Emerald Bay was doing very well and always has high occupancies. But what they said was, despite the high occupancies, it was very had
for such amount, in a form acceptable to the [VAT] comptroller at the time the assessment is lodged”.
Sandals Emerald Bay had offered to pay the $30.844m via a “letter of guarantee” from its bankers, CIBC Caribbean (Bahamas), which would serve as security for the disputed tax debt. This, though, was allegedly rejected by the Ministry of Finance and Department of Inland Revenue which continued to demand a cash bond.
The resort chain alleged that Mr Wilson, Mrs Strachan and Patricia Jackson, the Department of Inland Revenue’s in-house attorney, advised during a December 22, 2023, conference call that the bank guarantee would only be accepted if Sandals and its Emerald Bay operator agreed that the disputed sum was owing and moved to negotiate a settlement “in good faith”.
However, if the resort proceeded with the Tax Appeal Commission action, then a cash bond would be required. This position was branded as “unreasonable” and “punitive” by Michelle Pindling-Sands, the Graham, Thompson & Company attorney representing Sandals Emerald Bay, in a December 19, 2023, e-mail reply to Mr Wilson, Mrs Strachan and other tax officials.
Donna Delva, a Clearview Management director, asserted that the $30.844m sum demanded by the Department of Inland Revenue was equal to “almost 90 percent” of the Exuma resort’s “package revenue” as disclosed in its 2022 financial statements. Mandating a cash bond would “have a material impact” on Emerald Bay’s “ability to meet its operating expenses and other financial obligations”.
Bahamas and central bank of Barbados have agreed to be participants in the pilot.
“There is technical work going on now in terms of understanding what would be required for each country. The intention is that we would test the sending and settlement of payments between countries regionally, and do so where the central banks participate on some level in what the net settlement process looks like at a regional level such that we do not in every case have to route payments bilaterally through channels that we currently do in order to get values transferred regionally.”
Confirming that he was referring to payment mechanisms originating in the US and Europe, Mr Rolle added: “To the extent that we are able to take
to make money because they did not have enough rooms to support the infrastructure. They wanted to convert it to a Beaches and, in so doing, make it a profitable property.”
The assertion about Emerald Bay’s profitability was backed up by evidence filed with the Supreme Court as part of the tax dispute. Melissa John, its financial controller, described the Exuma-based resort as “a loss-making company with negative retained earnings at June 30, 2022”. However, while the former Minnis administration was keen for Sandals to proceed with the Beaches conversion, it ultimately baulked at the extent of
Supreme Court justice, Denise Lewis-Johnson, in a January 12, 2024, Order imposed a “stay” or injunction barring the Ministry of Finance and Department of Inland Revenue’s demand for a cash payment while giving Sandals Emerald Bay permission to proceed with its Judicial Review challenge. The case is still before the Supreme Court.
The Department of Inland Revenue, in its original July 20, 2023, letter detailing the results of its tax audit, asserted that the consequences of paying the $30.844m in alleged tax arrears were “not material” for a company of Sandals’ size. It pointed to gross annual revenues of $4bn generated by the parent, Sandals Resorts International 2000.
“The resort under audit [Emerald Bay] alone generates revenue for the corporate group in non-COVID years of approximately $120m annually,” the Department of Inland Revenue said. “Sandals Resorts International 2000 has 17 Sandals resorts, two Beaches resorts, Fowl Cay and Your Jamaican villas.
“If all resorts generated similar revenue the total revenue for the corporate group would be $2.5bn per year. The unreported VAT for the audit period is $29m. The penalty represents 2 percent of the VAT owing.” This analysis, though, was rejected by Ms John and Sandals.
“The financial consequences for Clearview Management are material,” she wrote. “Whilst it is part of the Sandals Resorts International 2000 group it is not relevant to consider what the potential size of the Sandals Resorts International 2000 group is because any VAT owing
advantage of transactions and trade that are already happening in the Caribbean, where there is still room for more growth, that would be an opportunity to economise how much foreign exchange we have to use on a gross basis to accommodate trade.
“I think that for The Bahamas, when I look at the pattern of our payments and flows, we are on the net sending side of the business in payments. The way to look at it from a benefit perspective is there could be an opportunity to reduce some of the transaction costs around sending payments, and similarly for businesses transacting on any level with others in the Caribbean there would be an opportunity to have more direct means of settling payments.”
the tax concessions sought by the resort chain. “They wanted lots and lots and lots of concessions,” the source said. “They wanted dutyfree, no work permit fees, exemptions from Business Licence fees and no property tax. They even wanted VAT exemptions.
“They wanted a lot of tax exemptions, and the view of the Government at the time was that Exuma already had full employment and they were having difficulty getting people to go down there. The Government would have loved them to do the project, but was not minded to give those concessions. Their ask was so excessive that the Government was not minded to endorse it.
As for the Sand Dollar, the Central Bank-backed Bahamian digital currency, Mr Rolle said the initiative’s “Wallet 2.0” had enjoyed a “quiet release” in June and is set to receive increased promotion now that it is in circulation. Bahamians can download the relevant app, complete the process and set-up a digital wallet they can use “immediately” while selecting the financial institution/provider they desire,” he added. Mr Rolle said the Central Bank has “a very active work agenda” as it consults the credit unions over potential improvements to the Cooperatives Act. He added that further amendments are also planned to the Central Bank of The Bahamas Act to strengthen “the framework for crisis management and financial stability”.
“We are also... very close to completing the exercise
“The Government was worried about the precedent it set. The economic benefits were substantial, but Exuma was already operating in a full employment scenario. There’s no doubt that having Sandals there has attracted more people in much the same way Sol Kerzner attracted more people to The Bahamas by developing Atlantis.”
The source explained the Minnis administration was worried that granting Sandals the tax breaks it sought would lead to other investors and developers, especially those in the resort industry, seeking similar treatment and The Bahamas would give too much away. The likes of Atlantis and Baha Mar have so-called ‘Most Favoured Nation’ clauses in their Heads of Agreement that immediately grant them the same concessions if a rival developer is treated more fairly.
As for Sandals’ dispute with the tax authorities, Mr Pintard voiced concern about the potential negative fall-out for businesses and individuals that - either directly or indirectly - rely on Emerald Bay for their livelihoods while at the same time agreeing all companies must meet their obligations to the Public Treasury.
“We would be deeply concerned that this matter has arisen,” he said of the
would have to be settled by Clearview Management.
“The proposed audit adjustment of $31m represents nearly 90 percent of Clearview Management’s package revenues reported in Clearview Management’s 2022 financial statements and, as a loss-making company with negative retained earnings at June 30, 2022, such an adjustment would have a material impact on the future of Clearview Management.”
The Sandals Emerald Bay tax dispute has emerged amid an aggressive crackdown by the Ministry of Finance/Department of Inland Revenue via audits and other measures to ensure the private sector is paying its fair share and all sums due to the Public Treasury are remitted.
While most would back increased enforcement and compliance, the Government’s determination to extract all that is owing by existing businesses is thought to at least be partially driven by its eagerness for revenue amid the ongoing fiscal crisis coupled with a desire to avoid imposing new and/or increased taxes.
Philip Davis KC, in closing the 2024-2025 Budget debate in the House of Assembly, said: “There are special interests out there who pay their mouthpieces a lot of money to push narratives about us that do not reflect reality.
“They pretend there are new taxes when, really, they are unhappy that businesses are simply being asked to comply with the law, and pay what they owe, same as everyone else. This is a basic principle of fairness.... We are building a foundation for a more inclusive and fair society where everyone truly pays their fair share.”
with the Attorney General’s Office, which includes the Registrar General’s Department, of getting The Bahamas to the point of setting up a secured transaction or mobile collateral assets registry, so we are in the final stages of cleaning up the draft legislation for that. That’s a very important piece of work we are focused on,” the Governor added.
Mr Rolle said conditions remain “very favourable” for continued examination of further administrative reforms that would liberalise exchange controls. He added that commercial banks are using The Bahamas’ first-ever credit bureau with “greater intensity” to assess borrower credit risk, while the process of getting utility firms and other credit providers “fully regimented” into its operations continues.
Opposition, “and the Government should indicate to the best of their knowledge how such a long-standing arrears accumulated.... How would that have accumulated and escaped notice.” Given that the Department of Inland Revenue’s audit and tax demands cover a six-year period, from 2017 to 2022, Mr Pintard said this period encompasses three administrations - the end of the last Christie administration’s term in office, the entire Minnis administration’s term, and the first year of the Davis administration.
“The Government ought to indicate at what point they discovered this and what specific measures have been taken to plug what is a substantial gap in the tax collection,” he added, while voicing concern over the impact the payment demand may have on Sandals Emerald Bay’s operations.
“This substantial requirement goes to their ongoing operational expenses,” Mr Pintard said, “and we would be deeply concerned as to their ability to honour this if, in fact, these figures are accurate. We fully expect that businesses obliged to pay should pay and, under any administration, businesses should honour their commitments. This raises uncertainty over their capacity to continue to do business and pay those arrears.”
UK’S NEW TREASURY CHIEF
AXES PROJECTS TO SAVE COSTS AND CONFIRMS DEAL TO END DOCTORS STRIKE
By PAN PYLAS Associated Press
BRITAIN'S new Labour government axed several construction projects and withdrew a winter fuel payment for millions of retirees Monday to cover what it called a newly uncovered 22-billion-pound ($28 billion) shortfall in the public finances inherited from the previous Conservative administration.
In her first major speech as Treasury chief, Rachel Reeves accused the previous government of covering up the dire state of the nation's finances following a review of departmental spending that she commissioned three weeks ago in the wake of Labour's landslide victory.
"They ducked the difficult decisions, they put party before country and they continued to make unfunded commitment after unfunded commitment, knowing that the money was not there, resulting in the position that we have now inherited," she said.
Reeves, the U.K.'s first female Chancellor of the Exchequer, said the audit had found several sources of excess spending pressures, with nearly half of the total identified a result of the non-accounting of upcoming pay awards in the public sector. A 6.4 billion-pound overspend in the asylum system was also identified, partly connected with the failed plan to send migrants on a one-way journey to Rwanda. Among other commitments, Reeves said spending on the war in Ukraine had not been fully funded.
While not announcing any changes in taxes, Reeves set out a series of "difficult" savings to recoup money over the coming couple of years, including the establishment of an office to identify "wasteful spending."
Some transportation projects where funding has yet to be determined will be axed, including a contentious plan to dig a tunnel near Stonehenge, while the previous government's new hospital program will be
scrapped and replaced by one that is "thorough, realistic and costed timetable for delivery."
Perhaps most controversially, Reeves announced that a winter payment currently going to all retirees to help pay for fuel will now be given only to those most in need. A plan to limit the costs individuals pay for their care in old age will be abandoned.
Reeves also put lawmakers on notice that there may be some tax increases when she delivers her first budget on Oct. 30. It will involve "taking difficult decisions ... across spending, welfare and tax."
Labour, back in power after 14 years, pledged during the campaign that it wouldn't raise taxes on "working people," saying its policies would deliver faster economic growth and generate the additional revenue needed by the government. Reeves could look to raise more revenue by other means such as closing tax loopholes, particularly on capital gains or on inheritance.
Critics, especially her predecessor Jeremy Hunt, argue that Reeves is trying to score early political points in the new Parliament, and that she knew full well the state of the public finances during the general election.
"If you're in charge of the economy, it's time to stop trash-talking it," Hunt said in response to Reeves' speech. "She will fool absolutely no one with a shameless attempt to lay the grounds for tax rises that she didn't have the courage to tell us about."
Reeves also announced a series of pay agreements with staff in the public sector, from teachers to
doctors. Most importantly, she said the government had reached agreement with unions to end the longrunning strike of doctors in England in the early years of their careers. It will see so-called junior doctors getting a 22% pay increase over two years.
The Institute for Fiscal Studies, a well-respected economic think tank, had accused both main parties during the election of a "conspiracy of silence" over the scale of the financial challenges facing the next government, with the country's debt burden running at nearly 100% of national income, its highest level since the early 1960s.
But even the IFS appears to think that the situation was even worse than predicted and that Reeves is "within her rights to feel somewhat aggrieved," especially with regard to the asylum bill.
"It was always clear and obvious that the spending plans she inherited were incompatible with Labour's ambitions for public services, and that more cash would be required eventually," said Paul Johnson, IFS director. "But the extent of the in-year funding pressures does genuinely appear to be greater than could be discerned from the outside, which only adds to the scale of the problem."
A parody ad shared by Elon Musk clones Kamala Harris' voice, raising concerns about AI in politics
By ALI SWENSON Associated Press
A VIDEO that uses an artificial intelligence voicecloning tool to mimic the voice of Vice President Kamala Harris saying things she did not say is raising concerns about the power of AI to mislead with Election Day about three months away.
The video gained attention after tech billionaire Elon Musk shared it on his social media platform X on Friday without explicitly noting it was originally released as parody. By late Sunday, Musk had clarified the video was intended as satire, pinning the original creator's post to his profile and using a pun to make the point that parody is not a crime.
The video uses many of the same visuals as a real ad that Harris, the likely Democratic president nominee, released launching her campaign. But the fake ad swaps out Harris' voice-over audio with an AI-generated voice that convincingly impersonates Harris.
"I, Kamala Harris, am your Democrat candidate for president because Joe Biden finally exposed his senility at the debate," the AI voice says in the video. It claims Harris is a "diversity hire" because she is a woman and a person of color, and it says she doesn't know "the first thing about running the country." The video retains "Harris for President" branding. It also adds in some authentic past clips of Harris.
Mia Ehrenberg, a Harris campaign spokesperson, said in an email to The Associated Press: "We believe the American people want the real freedom, opportunity and security Vice President Harris is offering; not the fake, manipulated lies of Elon Musk and Donald Trump."
The widely shared video is an example of how lifelike AI-generated images, videos or audio clips have been utilized both to poke fun and to mislead about politics as the United States draws closer to the presidential election. It exposes how, as high-quality AI tools have become far more accessible, there remains a lack of significant federal action to regulate their use, leaving rules guiding AI in politics largely to states and social media platforms.
The video also raises questions about how to best
handle content that blurs the lines of what is considered an appropriate use of AI, particularly if it falls into the category of satire.
The original user who posted the video, a YouTuber known as Mr Reagan, disclosed from the beginning both on YouTube and on X that the manipulated video is a parody. Yet Musk's initial post with the video, which had far wider reach with 130 million views on X, according to the platform, only included the caption "This is amazing" with a laughing emoji.
Over the weekend, before Musk clarified on his profile that the video was a joke, some participants in X's "community note" feature suggested labeling his post as manipulated. No such label has been added to it, even as Musk has separately posted about the parody video. Some users online have questioned whether his initial post might violate X's policies, which say users "may not share synthetic, manipulated, or out-of-context media that may deceive or confuse people and lead to harm."
The policy has an exception for memes and satire as long as they do not cause "significant confusion about the authenticity of the media."
Chris Kohls, the man behind the Mr Reagan online persona, pointed an AP reporter to a YouTube video he posted early Monday responding to the ordeal. In the YouTube video, he confirmed he used AI to make the fake ad and argued that it was obviously parody, with or without a label.
Musk endorsed Trump, the Republican former president and current nominee, earlier this month. He didn't respond to an emailed request for comment.
Two experts who specialize in AI-generated media reviewed the fake ad's audio and confirmed that much of it was generated using AI technology.
One of them, University of California, Berkeley, digital forensics expert Hany
Farid, said the video shows the power of generative AI and deepfakes.
"The AI-generated voice is very good," he said in an email. "Even though most people won't believe it is VP Harris' voice, the video is that much more powerful when the words are in her voice."
He said generative AI companies that make voicecloning tools and other AI tools available to the public should do better to ensure their services are not used in ways that could harm people or democracy.
Rob Weissman, copresident of the advocacy group Public Citizen, disagreed with Farid, saying he thought many people would be fooled by the video.
"I'm certain that most people looking at it don't assume it's a joke," Weissman said in an interview. "The quality isn't great, but it's good enough. And precisely because it feeds into preexisting themes that have circulated around her, most people will believe it to be real."
Weissman, whose organization has advocated for Congress, federal agencies and states to regulate generative AI, said the video is "the kind of thing that we've been warning about."
Other generative AI deepfakes in the U.S. and elsewhere have tried to influence voters with misinformation, humor or both. In Slovakia in 2023, fake audio clips impersonated a candidate discussing
N O T I C E
JIREH HOLDING LIMITED
N O T I C E IS HEREBY GIVEN as follows:
(a) JIREH HOLDING LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.
(b) The dissolution of the said company commenced on the 20th December, 2022 when the Articles of Dissolution were submitted to and registered by the Registrar General.
(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas
Dated this 30th day of July, 2024
Bukit Merah Limited Liquidator
plans to rig an election and raise the price of beer days before the vote. In Louisiana in 2022, a political action committee's satirical ad superimposed a Louisiana mayoral candidate's face onto an actor portraying him as an underachieving high school student.
Congress has yet to pass legislation on AI in politics, and federal agencies have only taken limited steps, leaving most existing U.S. regulation to the states. More than one-third of states have created their
concerns about the power of artificial intelligence to mislead just three months away from November’s elections. The video gained attention after Musk shared it on his social media platform X on Friday, July 26, without noting it was originally released as parody.
own laws regulating the use of AI in campaigns and elections, according to the National Conference of State Legislatures. Beyond X, other social media companies also have created policies regarding synthetic and manipulated media shared on their platforms. Users on the video platform YouTube, for example, must reveal whether they have used generative artificial intelligence to create videos or face suspension.
NOTICE
IN THE ESTATE OF BORDEN ADOLPHUS HIGGS late of the Settlement of Spanish Wells in St. George’s Cay, one of the Islands of The Commonwealth of The Bahamas. Deceased.
NOTICE is hereby given that all persons having any claims against the above-named Estate are required on or before the 15th day of August A. D., 2024 to send their names and addresses and particulars of their debts or claims to the undersigned in writing or in default thereof they will be excluded from the benefit of any distribution AND all persons indebted to the said Estate are hereby requested to pay their respective debts to the undersigned on or before the date above mentioned.
AND NOTICE is hereby also given that at the expiration of the time period above mentioned, the assets of the late BORDEN ADOLPHUS HIGGS will be distributed among the persons entitled thereto having regard only to the claims of which the Executors shall then have had notice in writing.
Roberts, Isaacs & Ward, Unit No.2, Cable Beach Court Professional Centre, 400 West Bay Street, Nassau, Bahamas.
BRITAIN’s Chancellor Rachel Reeves delivers a speech at the Treasury to an audience of leading business figures and senior stakeholders, in London, on July 8, 2024. Reeves is alleging that the previous government covered up the dire state of the nation’s finances, as she prepares to deliver a major speech to Parliament that is widely expected to lay the groundwork for higher taxes.
Photo:Jonathan Brady/AP
TESLA and SpaceX CEO Elon Musk addresses the European Jewish Association’s conference in Krakow, Poland, Jan. 22, 2024. A manipulated video that mimics the voice of Vice President Kamala Harris to impersonate her is raising
Photo:Czarek Sokolowski/AP
Wall Street drifts to a mixed finish ahead of a frenetic week
By STAN CHOE AP Business Writer
U.S. stock indexes drifted to a mixed finish Monday to kick off a week full of earnings reports from Wall Street's most influential companies and a Federal Reserve meeting on interest rates.
The S&P 500 edged up by 4.44 points, or 0.1%, to 5,463.54, coming off its first back-to-back weekly losses since April. The Dow Jones Industrial Average slipped 49.41, or 0.1%, to 40,539.93, and the Nasdaq composite added 12.32, or 0.1%, to 17,370.20.
ON Semiconductor helped lead the market with a jump of 11.5% after the supplier to the auto and other industries reported stronger profit for the spring than analysts expected. McDonald's rose 3.7% despite reporting profit and revenue for the latest quarter that fell shy of forecasts. Analysts said its performance at U.S. restaurants wasn't as bad as some investors had feared. They helped offset slides for oil-and-gas companies, which were some of the heaviest weights on the market after the price of oil sank back toward where it
was two months ago. ConocoPhillips lost 1.6%, and Exxon Mobil fell 1% amid worries about how much crude China's faltering economy will burn.
Several of Wall Street's biggest names are set to report their own results later this week: Microsoft on Tuesday, Meta Platforms on Wednesday and Apple and Amazon on Thursday. Their stock movements carry extra weight on Wall
Street because they are among the market's largest by total value.
Such Big Tech stocks drove the S&P 500 to dozens of records this year, in part on investors' frenzy around artificialintelligence technology, but they ran out of momentum this month amid criticism they've grown too expensive, and as alternatives began to look more attractive. Last week, investors
found profit reports from Tesla and Alphabet underwhelming, which raised concerns that other stocks in what's known as the "Magnificent Seven" group of Big Tech stocks could also fail to impress. "AI hype days are over," according to Bank of America strategists led by Savita Subramanian. "Time to show monetization." What's helped support the U.S. stock market
SPECIALIST Anthony Matesic works on the floor of the New York Stock Exchange, on July 22, 2024. World stocks started of with gains July 29, 2024 ahead of central bank policy meetings in the United States and Japan, after a broad rally on Wall Street that capped a tumultuous week.
even as those Big Tech behemoths weakened has been strength from other areas that had been beaten down by high interest rates meant to get inflation under control. Smaller stocks in particular soared on expectations that slowing inflation will get the Federal Reserve to soon begin cutting interest rates.
That pattern unwound a bit on Monday, as the majority of Big Tech stocks rose while the smaller stocks in the Russell 2000 index slumped 1.1%. But the Russell 2000 is still up by a market-leading 9.2% for the month so far.
The Fed will hold its latest policy meeting on interest rates this week, and an announcement will come on Wednesday. Virtually no one expects a move then, but the widespread expectation is that it will begin easing at its following meeting in September.
Treasury yields held relatively steady in the bond market, and the yield on the 10-year Treasury slipped
to 4.17% from 4.19% late Friday. It was as high as 4.70% in April.
In stock markets abroad, Japan's Nikkei 225 index jumped 2.1%. Its central bank will also announce a decision on interest rates this week. Expectations are for it to raise rates.
Indexes rose 1.3% in Hong Kong and were roughly flat in Shanghai after official data on Saturday showed industrial profits rose 3.5% in the first half of 2024 from a year earlier. That was a glimmer of positive news following recent cuts to interest rates and other piecemeal stimulus that followed a top-level policy meeting of the ruling Communist Party earlier this month.
The FTSE 100 edged up by 0.1% in London ahead of a meeting for the Bank of England this week, where some investors expect to see a cut in interest rates.
By DEE-ANN DURBIN AP Business Writer
They're
not lovin' it.
McDonald's global samestores fell for the first time in nearly four years in the second quarter as inflationweary consumers skipped eating out or chose cheaper options. The company said it's working on fixes, like meal deals and new menu items, but it expects samestore sales to be down for the next few quarters.
"Consumers still recognize us as the value leader versus our key competitors, it's clear that our value leadership gap has recently shrunk," McDonald's Chairman, President and CEO Chris Kempczinski said Monday during a conference call with investors. "We are working to fix that with pace."
Sales at locations open at least a year fell 1% in the April-June period, the first decline since the final quarter of 2020, when the pandemic shuttered stores and millions stayed home.
In the U.S., samestore sales fell nearly 1%.
McDonald's saw fewer customers but it said those who came spent more because of price increases. Kempczinski defended the higher menu prices, saying the costs for paper, food and labor increased as much as 40% in some markets over the last few years. It's an issue that goes beyond the Chicago burger giant. Customer traffic at U.S. fast-food restaurants fell 2% in the first half of the year compared to the same period a year ago, according to Circana, a market research company.
David Portalatin, a food industry advisor for Circana, expects high inflation and rising consumer debt will also dent traffic in the second half of 2024.
McDonald's also reported lower store traffic in France and the Middle East, where people have been boycotting the chain because of a perception that it supports Israel in the war in Gaza. Kempczinski said weak consumer sentiment in China has
customers fleeing to lowerpriced rivals. McDonald's warned in April that more of its inflation-weary customers were seeking better value and affordability. The company introduced a $5 meal deal at U.S. restaurants on June 25, which was late in this financial reporting period. McDonald's U.S. President Joe Erlinger said Monday that $5 meal deal sales are running ahead of expectations and are getting lowerincome consumers back into McDonald's stores. Erlinger said 93% of McDonald's franchisees have agreed to run the promotion through August. Other countries, such as Germany and the United Kingdom, are also seeing success with meal deals, the company said. But Kempczinski said McDonald's needs to be providing broader value and boosting that message with better marketing.
"Trying to move the consumer with one item or a few items is not sufficient for the context that we're in," he said.
New menu items are also in the works. The company is testing its value-oriented Big Arch double burger in three international markets through the end of this year, Kempczinski said.
For the second quarter, revenue was flat at $6.5 billion and just off the $6.6 billion that Wall Street was expecting, according to analysts polled by FactSet. The company's net income fell 12% to $2 billion, or $2.80 per share.
Excluding one-time items such as restructuring charges, McDonald's earned $2.97 per share. That was far from the per-share profit of $3.07 that industry analysts had forecast.
Investors appeared satisfied with the plans McDonald's has to reverse its slide. McDonald's shares rose 4% in morning trading Monday.
Photo:Richard Drew/AP