tion to allow businesses to improve compliance, as there is still a significant amount
of businesses that are not meeting their
legal obligations.
Mr. Speaker,
VAT performance continues to be strong.
There are 6,361 VAT registrants, of which
653 file monthly and 5,708 file quarterly.
Almost 80 per cent of the monthly filers
and two-thirds of the quarterly filers do
file on time. And, of those registrants that
filed, 75 per cent of the monthly filers and
two-thirds of the quarterly filers paid on
time. Although not all VAT registrants paid
on time, over 90 per cent eventually settle
their obligations. The DIR processes refunds weekly and has received 1,661 applications, of which $6.2 million has been
paid. The Department is now focusing
much attention on improving taxpayer
services in areas of refund management
and policy responses.
As for the VAT on property transactions
and the first home exemption, it is anticipated that applicants for the exemption
will be able to apply electronically early in
the upcoming fiscal year. This development will lead to an integrated administration of taxes on conveyances and leases.
MODERNIZING PUBLIC SERVICES
Mr. Speaker,
The Government has also implemented a
significant reform of our energy system in
the form of a modernized BEC with private sector management. This will result in
a more secure supply of electricity, as well
as lower prices for both consumers and
businesses.
As well, we have implemented communications reform with majority economic
ownership of BTC and the award of a second cellular license.
CELLULAR LIBERALIZATION
Mr. Speaker,
It will be recalled that, in October 2015,
Cable Bahamas Limited (CBL) emerged
as the successful bidder in the two-phased
selection process to liberalize the cellular mobile market in The Bahamas. This
process was initiated by my Government
back in November 2014, with a Request
for Proposals (RFP) to operate a second
cellular mobile network.
By way of reminder, the RFP stipulated
that a new Bahamian company (NewCo)
would be formed to hold the cellular licences, and that the successful applicant
of the process would be a minority shareholder of NewCo. Another Bahamian
company (HoldingCo) would be formed
as the entity that will hold the majority
equity ownership interest in NewCo on
behalf of the Bahamian public.
Immediately following the conclusion of
the Phase II spectrum auction in October,
the Cellular Liberalization Task Force commenced discussions with CBL on the ownership arrangement of NewCo. These
discussions have led to the conclusion of
a Shareholder’s Agreement (SHA) that will
govern the relationship between CBL and
HoldingCo.
In line with CBL’s Phase I commitments,
HoldingCo will hold 51.75% of the shares
in NewCo and CBL will hold the remaining 48.75%.
LICENSING OF NEWCO
In light of CBL having met the remaining
requirements of the RFP, I am pleased to
advise that the Government will notified
the Utilities Regulation and Competition
Authority (URCA) to proceed with the
licensing of NewCo. Although CBL will
have management and board control of
NewCo, HoldingCo will have certain standard market veto rights in order to protect its investment.
The first Board Meeting of NewCo is expected to take place in the coming weeks.
The licence will be awarded to NewCo for
a fifteen year period and NewCo’s trade
name will be disclosed just prior to its
launch date later this year.
HOLDING CO
In order to facilitate the timely formation
and licensing of NewCo, the Government
has incorporated HoldingCo with itself as
the sole and initial shareholder. Government’s shareholding in HoldingCo, however, will only be temporary in nature and
a Caretaker Board will be appointed until such time as HoldingCo’s shares have
been divested.
In the meantime, the focus of the Task
Force and its advisor, PricewaterhouseCoopers, will shift to soliciting eligible investors. This process however, will not interfere with the timing of NewCo’s launch
once the relevant licences have been
granted by URCA.
It is proposed that HoldingCo’s shares will
be offered to institutional investors (e.g.
local pension/mutual funds, co-operative
credit unions) within the next few months.
Such an offering will ensure that the equity
ownership in HoldingCo is as widely distributed as possible so that there will be
broad Bahamian ownership.
CELLULAR COMPETITION IS IMMINENT
The licensing of NewCo within the next
few weeks will mark yet another significant
milestone of this Government’s commitment to introduce competition in the cellular mobile market.
[17]
2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE