Bahamas legislators are questioning the cost of the government’s recent agreement with Chow Tai Fook Enterprises (CTFE) to own and operate the bankrupt $3.5 billion Baha Mar mega-resort following press reports that indicate Prime Minister Perry Christie’s administration has exempted China Construction America (CCA) Bahamas Limited, the project’s lead builder, from paying the nation’s value-added tax (VAT).

A January 4 email re-printed in the Bahamas Tribune and Nassau Guardian newspapers says all companies working on the completion of the stalled resort development had been granted a “full waiver” of the 7.5 percent levy. The email directs all CCA subcontractors to present invoices for payment that are devoid of VAT charges.

“Dear sirs, it’s agreed with the government that the subcontractors and suppliers of CCA Bahamas Ltd. shall be entitled to have the benefit of a full exemption from the payment of all value-added tax for works carried out on the Baha Mar project,” the email reads.

“Therefore, you are required not to charge the value-added tax on your invoices for goods and/or services to CCA.”

Although the email, which the Bahamas Tribune said was provided by a Baha Mar subcontractor, obscures the email’s recipient the sender is listed as Siyao Shen of CCA’s commercial department.

A VAT waiver would mean the Bahamas government could forego up to $60 million in revenue, according to the Tribune report, and generate dissent among Bahamian businesses and consumers who bear VAT costs. The waiver’s discovery also indicates the government’s agreement with CTFE, details of which have not been sealed by the Bahamas Supreme Court, may contain other costly concessions, said Bahamas legislators.

“The deal is of questionable value for the Bahamian people,” said Peter Turnquest, a Bahamas parliament member. “When you add up all the concessions, over a billion dollars, what do we have to show for it at the end of the day? We have a couple of jobs to show for it. “That is money that is being forfeited or invested for no equity,” he said.

Turnquest noted news of the concessions follows Standard & Poors December downgrading of the Bahamas’ investment rating to “junk” status, a sign that the multi-billion project’s impasse had damaged the country’s economic prospects.

A government source cited by the Bahamas Tribune said it was “not unusual” for subcontractors of major foreign investment projects to share tax incentives provided to the main contractor.

The source said the CTFE agreement was the first major investment deal since VAT’s implementation on Jan. 1, 2015. That has led to “confusion” because the investment incentives granted to CTFE “were no different from the typical package provided under the Hotels Encouragement Act.”

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