Though the Hawksbill Agreement has now expired, the Government of The Bahamas is looking to enter into a new agreement with the Grand Bahama Port Authority (GBPA) that will grant further tax concessions to the GBPA and its licensees for the next 20 years.
Prime Minister Perry Christie made the announcement in the House of Assembly on Wednesday as he introduced the Grand Bahama Port Area Investment Incentive Bill 2016.
According to the nation’s chief, the new framework is designed to cause new opportunities such as immediate investments in strategically important industries; the commitment of the GBPA to seek an injection of new equity capital into its group of companies through new globally respected shareholders or equity partners and project specific investors who will further the development and Grand Bahama and historic changes in the governance and transparency and regulatory framework that governs Freeport.
Additionally the framework provides opportunity for government ownership stakes in prime landholding companies which will allow for enhanced public/private development and partnerships; a commitment to social and infrastructure improvements to enhance quality of life; a new framework for performance-based development concessions that will replace the expiring tax concessions of the Hawksbill Creek Agreement; a focused and collaborative strategy to reshape the approach to attracting, retaining and expanding investment in Grand Bahama and a commitment to resolve longstanding issues related to government deficits in Freeport in a way that protects the government’s rights but creates a path forward in Freeport.
“It is envisaged that the MOU and agreements to be made with licensees will aim to fundamentally shift the investment and climate and economic prospects in Grand Bahama in a dynamic and positive way for all concerned,” Prime Minister Christie said.
“Underpinning these agreements for change and new investments is a new approach to development concessions in Grand Bahama.
“The expiring tax concessions as initially provided under the Hawksbill Creek Agreement and extended on multiple occasions were designed in a different era and need to be updated. Tax concessions, when properly used, should be an inducement to encourage private sector investment and/ or employment. Accordingly, we will be establishing a new framework that will replace and modernize the current framework for tax concessions in Freeport.”
Prime Minister Christie said the government would maintain the tax concessions based on periodic performance over five years.
“The government would collaborate with GBPA on the design of the framework. The same framework will apply to new licensees once they submit and obtain approval of their development plans,” he said.
“In return for the undertakings and assurances by GBPA, Freeport Harbour Company, Grand Bahama Development Company and Freeport Commercial & Industrial Company Ltd. The government is to take the necessary measures to grant the expiring concessions to these companies, their existing affiliates, subsidiaries and joint venture companies in like terms for a period of 20 years commencing May 4th, 2016.”
Prime Minister Christie said the lack of taxes in Freeport caused many property owners to sit on undeveloped line without any recourse. He added that officials plan to address that issue.
“To address this situation and enhance revenue base in Freeport, we intend to create a new framework where real property tax would be payable on undeveloped land held by non-Bahamians owning more than five acres,” he said.
