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Govt to crackdown on false invoices

Serious government action is underway to track down on companies currently dodging full payment of customs duties by using false invoices–the move key to stopping the loss of millions of dollars in revenue.

State Minister for Finance Zhivargo Laing confirmed toGuardian Businessthat significant efforts will be rolled out in the new year to take control of those losses and tighten port collections.

“It is a big problem, no doubt about that,”he said yesterday.”There are some commercial entities we understand that have set up entire operations in Florida, that produce these false invoices… maybe even dummy companies[and]they buy their stuff from their dummy companies at a price that is significantly lower than they paid.

“So that means the person pays duty on a lower price[which]reduces their duty. That’s what we understand some people are doing.”

While he would not outline exactly how the government plans to tackle this issue, he asserts the public will soon be

made aware of the steps government intends to take.

False invoicing happens when somebody goes to the U.S. and purchases items, with the store they purchase from being complicit in producing a separate invoice at a lower price. It is a document that is then carried to the Customs Department in The Bahamas, instead of the invoice for items purchased at cost value.

It’s a problem that has been plaguing everyone from grocery retailers to car dealerships. According to head of the Bahamas Motor Dealers Association Fred Albury, the situation gives certain companies an advantage over others.

“There’s a lot of corruption with duties paid on used vehicles,”he said.”With all the underhanded invoicing going around, the government is not realizing the revenue they should realize.

“Coupled with the economic conditions, they are not going to realize the type of revenue from the auto industry that they could be realizing.”

A top store chain executive recently toldGuardian Businessabout an increasing amount of”informal”competition”which has contributed to the loss of millions of dollars of customs revenue.

Abaco Markets Limited CEO Gavin Watchorn said the practice of re-invoicing had created pricing issues in the grocery market, and it was an occurrence that was­on the rise in recent times.

“There’s plenty of that going on here in The Bahamas,”he said.”When you’re a small economy, it gets magnified more.”

It’s a situation currently playing itself out, with Watchorn confirming the practice has had its effects on his company’s operations.

Chairman Dionisio D’Aguilar said the frequency of this occurrence should raise questions for Customs as to how a company is able to price items so low in the market.

“Given our current tax structure this type of thing is certain to occur to give some people an uncompetitive business advantage,”he toldGuardian Businessrecently.”As far as I’m aware it is extremely difficult to buy items with significant price difference, especially if you’re a startup and a new entrant in the market and there’s an established vendor.

“Millions of dollars are lot when they[re-invoice items].”

D’Aguilar asserted things were getting better and that a new mindset in the Customs department has led to more vigilance from the officers, even though frustration, he said, was increasing among the wholesalers and the established businesses.

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