In the wake of Hurricane Dorian, the government has designated Abaco and East Grand Bahama as “special economic recovery zones” for three years, Prime Minister Dr. Hubert Minnis announced yesterday.
“Accordingly, to facilitate the required social and economic recovery on the islands impacted by Dorian, I am pleased to announce that East Grand Bahama, Abaco and the Abaco Cays will be designated as special economic recovery zones for an initial period of three years,” Minnis said.
“This designation – modeled after what is already in place for the Over-the-Hill Initiative – will enable the communities impacted by Hurricane Dorian to benefit from a broad range of tax breaks and incentives.
“They will also benefit from other means of support that will restore the various economies, and indeed, over time, make these economies more vibrant.”
Earlier this month, Abaco and parts of Grand Bahama were destroyed by Dorian – a Category 5 storm with a death toll of at least 53.
Minnis said the initiative is important for the impacted areas because it will help them “to get back to their former levels of social and economic vitality”.
“It will be critical for the government to move with determination and haste to establish the right environment needed to restore commerce in the affected areas,” he said.
“Once commerce recommences, displaced residents can move back home with jobs and with economic opportunities. These communities must be restored to the economic and social vibrancy they enjoyed before Hurricane Dorian. We must do all that we can to ensure that this happens as soon as possible.”
As special economic recovery zones, the prime minister said, the impacted areas will be granted seven exemptions and other benefits.
“The following measures will be put in place,” Minnis said.
“…Duty free purchase of all materials, fixtures, furniture, vehicles and equipment for all business needs and for all business and residential construction/rehabilitation efforts. This provision will also be extended to domestic purchase of qualifying items…”
He said the government will also waive business license fees for operations within the zone.
It will also waive real property tax payable on all eligible property that are “reconstructed, restored or otherwise are inhabitable by October 2020,” according to Minnis.
“A VAT (value-added tax) credit of up to 50 percent on the sale of real property, provide that such sale will be immediately followed by material construction, on or enhancements to the property or the utilization of the purchased property to material commercial activity,” he said.
“To maintain the credit, the qualifying activity must commence within 75 days of the close of the sale and must be followed through to scheduled completion; otherwise the full VAT becomes payable.”
The prime minister said the government will also establish a $10 million loan guarantee and equity financing program which will allow qualifying Bahamian small and medium-sized businesses to secure up to $500,000 in financing “to fund restoration of businesses or the recreation of new businesses.”
He also said the provisional business license program will be extended with limited exceptions.
Minnis said qualifying businesses within the zone will be able to get their businesses started within two business days of completing the application.
He said the business owners would be granted provisional business licenses while they await their actual licenses.
The government will also establish a business assistance one-stop shop on both Grand Bahama and Abaco, according to Minnis.
He said the building will house representatives from the Small Business Development Centre (SBDC), the Bahamas Investment Authority, the Ministry of Finance, the Bahamas Investment Authority, the Department of Inland Revenue, the Department of Environmental Health and building permits units of the various agencies.
“This one-stop shop will be equipped and empowered to ensure that all existing and new businesses will be able to work through any regulatory requirements within five working days,” Minnis said.
“The provisions under the special economic recovery zone are intended to encourage and facilitate the rapid restoration of commerce in the affected areas so as to fulfill the government’s core objective of ensuring that Grand Bahamians and Abaconians can restart their lives on their own home islands.”