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Response from Former Deputy Minister Hall for West Caicos Development

20130117-114906.jpg20130117-114944.jpgResponse to Duty Concession for West Caicos

Date: 18 February 2013
By: Floyd Hall
Subject: Duty Concessions
It was a fascinating read for me going through the Development Order entered into by the Government of the Turks & Caicos Islands and West Caicos Development Company. This was particularly so given that at the Commission of Inquiry of 2009 and the past Interim Administration no effort was speared by the Commissioner and the British big wigs in branding these types of concessions offered by the then PNP Administration as being corrupt and damaging to the people of the Turks & Caicos Islands. In fact, I can still hear the constant refrains from the British folks that included: “because of the concessions offered by the former PNP Administration the country is broke; because of the former PNP Administration the country has lost millions of dollars in revenue; or because of the concessions offered by the previous administration we have to cut cost.”
Those refrains became so monotonous that I think some people begun to tune them out. However, those statements served their purpose well for they cultivated a diabolical and malicious narrative that fed into the notion that the PNP Administration was corrupt and that those investors who were associated with that administration or benefitted in any way from duty concessions offered by that government were likewise corrupt and ought to be held to account. Others harped on the chorus to draw erroneous conclusions that as ministers in government, we stole from the Government’s Treasury or sold the country out.
Needless to say that to jump to such a conclusion was a huge leap especially given that all Development Orders had to be processed through the Attorney General’s Office and ultimately approved by the Cabinet where the British Attorney General set as legal counsel and the Governor set as President. It would appear to me now that for the British, the only thing that mattered was for the elected government of the day to be destroyed and if it were necessary to brand the activities of that government as being corrupt in spite of the vast level of prosperity that it brought to our shores then so be it.
As far as the British representatives were concerned, they had the “support” of the people of the Turks & Caicos Islands to go after us and that they did. They obliterated our Constitution and cast us all as a group of misfits, saved for the few that they picked out to sit on their appointed bodies. Consequently by their actions or, in some cases inaction, they brought our economy to a screeching halt.
A different tale of sorts is now evolving in the Turks & Caicos Islands today. The sinister plot of the British representatives is gradually being exposed. Even those who were in the minority calling out for the British suspension of our Constitution and to take control over our country are beginning to see that this was a monumental mistake. The gross incompetence of some of these British representatives is wreaking havoc on our country daily. We now have a Governor who thinks he is the law; an Attorney General who is absent more often than he is present (both physically and mentally) and law suits that appear to have no end. One has to ask the question these days, was it worth it? Or, are we any better off for what we have had to endure?
Getting back to the issue of duty concessions, I must say that I support the West Caicos Development Group getting its concession. Likewise, I support the concessions that we gave during our time in office to the Seven Stars, Grace Bay Club, The Regent Group of Companies, Third Turtle Club, the Salt Cay Group, Dellis Cay, Beaches, The Veranda and many other foreign investment entities that came to our shores during that period. These concessions are a necessity in small island economies such as ours.
As a small developing country, we have to remain cognizant that we operate in a competitive environment both regionally and internationally. Within the fifty states of the U.S. there is fiscal competitiveness constantly. Texas competes with California for corporate business, New York with New Jersey and there are countless other areas of competiveness. China competes with the U.S with Trade and technology, Hong Kong competes with New York and the City of London. We operate in a competitive universe and elected governments need control of their fiscal policy to make their countries’ economies competitive.
We offer tourism as our main product. Unless we are attractive to foreign investment, it will go elsewhere for certain. Investors everywhere look at the rate of return on their dollars invested and to help them in selecting the TCI for their investment the cost of doing business on our shores is a huge factor in the calculation. That is why we need to remain nimble to adjust to variations in the market place to maintain our competitive edge.
But in meeting the foreign investor’s need for concessions, we cannot forget our indigenous Turks & Caicos Islanders. That is why I am particularly proud of the concessions that our government gave to our local Turks & Caicos Islanders. These included generous concessions to the taxi drivers, the tour boat operators, the owners of apartments, on the fixed assets for commercial businesses, the local car rental agencies, the cargo brokers dealing with bulk material and the list goes on and on. The only criterion that was necessary by my office was that you had to be a Turks & Caicos Islander who was engaged in a business endeavor in our country. The benefits that were given went equally to persons of all walks of life, regardless of political persuasion or color of one’s skin.
Some will quickly say that as a small country we cannot afford these concessions. In fact that is exactly what some of the British pundits said. However, they failed to take into account that had it not been for those concessions many of the properties that we now call development and are contributing heavily to our revenues in the form of accommodation tax, departure tax and import duties would not be here today. Likewise, had we not given concessions to our local businessmen, they would not be the owners of businesses in our country either. Therefore, it would be a huge mistake to look at the concessions in isolation. While concessions must be tempered with reason and balance, they do serve an important function to stimulate or maintain both local and foreign investment.
Our party is indeed very proud of our initiative with duty concessions as well as the others we made in tertiary education, health and Crown land. Before our administration, these areas were beyond the reach of our people on this scale. Many Turks & Caicos Islanders were able to get their businesses started and have remained successfully engaged in their companies to this very day. Some, however, are holding on by a “wing and a prayer” hoping for the construction industry to rebound. Nevertheless they are grateful for the opportunity from our government and expressions of gratitude are given by some to us regularly.
Unfortunately for some of the foreign developers who benefitted from duty concessions during this period, the British Interim Administration rewarded them by assessing heavy penalties simply because they supported our political party with campaign contributions. They have been criminalized or at the very least had their once impeccable reputations besmirched. This is patently unfair to these developers as they were properly entitled to support the political party of their choosing with whatever amount they wished under the prevailing laws of our country at the time. These developers were responsible in part for the exponential growth that our country enjoyed during this period. Many of these developments today are beacons of success for the Turks & Caicos Islands like the Seven Stars. Companies like these are a source of pride for Turks & Caicos Islanders who enjoy employment there. Regrettably, developments like the Salt Cay Group that could have been the gem for Salt Cay residents or Dellis Cay which could have provided invaluable opportunities for the people of North and Middle Caicos had to perish in this ill-conceived exercise by the British.
It is my understanding that some of these developers decided to settle their issues with the SIPT even though they felt that they could win legally but rather than being dragged through an arduous and litigious fight in the courts, they chose to exit this way. For some they settled even if it meant falsely admitting to being culpable to some form of impropriety with the government. For others I understand that no admission was necessary with their settlement.
Regardless of the situation, it seems to me that good governance is only dispensed when duty concessions or other governmental activities are undertaken by the British representatives to our shores. The question now for all indigenous Turks & Caicos Islanders is, are we back to those days when only those who come to our shores could receive a benefit from the government?
You be the judge!

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West Caicos Development Order in Turks and Caicos Islands

Richard Todd

West Caicos Development Order/Agreement

DEVELOPMENT ORDER
Legal Notice 2 of 2013
Made: 8th February 2013
Commencement: 15th February 2013
JASPER DEVELOPMENT COMPANY LTD DEVELOPMENT ORDER 2013
______________________________________________________________
MADE by the Governor under Section 4 of the Encouragement of Development Ordinance 1972
(Cap 20.01).
Citation
1. (1) This Order may be cited as the Jasper Development Company Ltd Development
Order 2013.
(2) The Logwood Development Co. Ltd. Development Order and The Logwood Hotel
Development Co. Ltd. Second Amended Development Order are hereby replaced.
Interpretation
2. In this Order:
(a) “Development” shall have the same meaning as in the Development Agreement.
(b) “The Development Agreement” means the Agreement dated the 6th day of
December 2012 and made between the Crown (1) the Government of the Turks
and Caicos Islands (2), the Developer (3), and Deer Valley Holdings Limited (4)
as amended, modified and supplemented (if applicable) in the interim.
(c) “excluded items” means the items deemed by the Collector of Customs to be
subject to full duty and shall include (but shall not be limited to) vehicles (other
than light weight environmentally friendly 4 or 2 stroke carts and/or electric
carts), amusement equipment, games of any kind, sailing boats, water sport
equipment, diving equipment, guest amenities, paper or cleaning supplies,
paintings, audio and audio visual equipment, linens, chinaware, flatware, kitchen
utensils, costumes, decorations, chemical products, gifts, area rugs and general
maintenance parts.
(d) “Developer” shall mean Jasper Development Company Ltd., a company
incorporated under the laws of the Turks and Caicos Islands, and having its
registered office at P.O. Box 127, Richmond House, Leeward Highway,
Providenciales, Turks and Caicos Islands, and shall include its Affiliates.
(e) “Affiliate” means with respect to a person (i) any other person that is directly or
indirectly controlled by, under common control with or controls such a person;
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(ii) any other person owning beneficially or controlling fifty percent (50%) or
more of the voting stock of such person; or (iii) any officer, director or partner of
such person. As used herein, the term “control” means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a person, whether by the ownership of partnership interest or voting
securities, by contract or otherwise.
Development Enterprise
3. The Development is declared to be a development enterprise in accordance with the
Encouragement of Development Ordinance 1972.
Developer
4. The Developer is declared to be the developer in accordance with the Encouragement of
Development Ordinance 1972.
Premises of Development Enterprise
5. The Development shall be constructed, managed and otherwise operated at the land on
West Caicos specified in the Development Agreement.
Commencement of Development Enterprise
6. The construction by the Developer of the Development has commenced pursuant to the
Logwood Development Co. Ltd. Development Order.
Completion of Development Enterprises
7. The date on or before which it is anticipated that the Development shall be completed is
31st December 2027.
Other Conditions
8. The construction and operation of the Development shall be carried out in accordance
with the terms and conditions of the Development Agreement. The benefits and
covenants expressed therein shall form part of this Order.
Declared Benefits – Phases 1 and 2
9A. Subject to the provisions of the Encouragement of Development Ordinance 1972 and
provided that at least seven (7) days prior to the importation of any article into the Turks
and Caicos Islands pursuant to this Order, the Developer shall furnish the Collector of
Customs with a list which shall be agreed with the Collector of Customs describing the
articles that are to be imported including their categories and their quantities, the
Developer shall be entitled with respect to Phase 1 and Phase 2 of the Development (as
those phases are defined in the Development Agreement):
(a) for a period of fifteen years from the date of this Order to exemption from:
(i) any taxes on profits, gains or turn-over attributable to the Development;
(ii) any real property tax, capital levy or other tax on capital invested in the
Development;
(b) in relation to the Hotel Development (as defined in the Development Agreement)15349797\1 -3-
for a maximum period of five (5) years from the date of this Order, or until the
Hotel Development is completed, which ever is the earlier, to a reduction to 7 %
in customs import duties under paragraph 4 of The Customs Tariff (General)
Order 1991 on-
Materials:
(i) all building materials (except excluded items) which the Collector of
Customs is satisfied are imported for and to be used solely in the initial
construction and fitting out of the Hotel Development;
Equipment:
(ii) all plant, machinery, equipment, tools (except excluded items) which the
Collector of Customs is satisfied are imported for and are to be used solely in
the initial construction of the Hotel Development;
Furniture, Fixtures and fittings:
(iii) all furniture, fixtures and fittings (except excluded items) which are normally
capitalised in accordance with the generally accepted accounting principles
and which the Collector of Customs is satisfied are imported for and to be
used solely in the initial construction of the Hotel Development;
(c) in relation to the remainder of the Development, for a maximum period of fifteen
years from the date of this Order, or until the Development is completed, which
ever is the earlier, a waiver of all customs import duties on all materials,
equipment, furniture, fixtures, fittings and items (other than excluded items) to be
used in the Infrastructure Works (as defined in the Development Agreement) of
the Development, including:
Materials:
(i) all building materials (except excluded items) which the Collector of
Customs is satisfied are imported for and to be used solely in the initial
construction and fitting out of the Infrastructure Works comprised in the
Development;
Equipment:
(ii) all plant, machinery, vehicles equipment, tools (except excluded items)
which the Collector of Customs is satisfied are imported for and are to be
used solely in the initial construction of the Infrastructure Works
comprised in the Development;
Furniture, Fixtures and fittings:
(iii) all furniture, fixtures and fittings (except excluded items) which are
normally capitalized in accordance with the generally accepted accounting
15349797\1 -4-
principles and which the Collector of Customs is satisfied are imported for
and to be used solely in the initial construction of the Infrastructure Works
comprised in the Development;
(d) from the date hereof until the expiry of a period of 15 years from date hereof, a
reduction to 10% in Customs import duties on all materials, equipment, furniture,
fixtures, fittings and items (other than excluded items) used in the Development;
(e) for a period of 15 years from the date of this Order, a reduction by 50% of the rate
of cargo dues on Materials payable from time to time under the Docks Ordinance
1984; or any statutory modification on re-enactment thereof and any regulations
made thereunder or, any other supplementary or additional enactment imposing
cargo dues, or the equivalent by whatever name called.
PROVIDED THAT if the Developer fails to give at least 7 days notice prior to the importation
of any article the Collector of Customs shall be entitled to charge customs duties at the full rate
in respect of such article AND PROVIDED FURTHER that duties on articles imported may
become payable as provided by Section 9 (1) of the Encouragement of Development Ordinance
in the event of their being disposed of in any manner within five years from the date of
importation.
Declared benefits – Phase 3
9B.1 Subject to the provisions of the Encouragement of Development Ordinance 1972 and
provided that at least seven (7) days prior to the importation of any article into the Turks
and Caicos Islands pursuant to this Order, the Developer shall furnish the Collector of
Customs with a list which shall be agreed with the Collector of Customs describing the
articles that are to be imported including their categories and their quantities, the
Developer shall be entitled with respect to Phase 3 of the Development (as that phase is
defined in the Development Agreement) for a maximum period of ten years from the
date of commencement of Phase 3, or until Phase 3 is completed, whichever is the earlier,
to—
(i) a reduction by 50% of the then-prevailing rate of customs import duty on-
Materials:
(i) all building materials (except excluded items) which the Collector of
Customs is satisfied are imported for and to be used solely in the initial
construction and fitting out of Phase 3;
Equipment:
(ii) all plant, machinery, equipment, tools (except excluded items) which the
Collector of Customs is satisfied are imported for and are to be used solely in
the initial construction of Phase 3;
Furniture, Fixtures and fittings:
(iii) all furniture, fixtures and fittings (except excluded items) which are normally
15349797\1 -5-
capitalised in accordance with the generally accepted accounting principles
and which the Collector of Customs is satisfied are imported for and to be
used solely in the initial construction of Phase 3; and
Infrastructure
(ii) a complete exemption from customs import duty on all building materials (except
excluded items) which the Collector of Customs is satisfied are imported for and to be used
solely in the initial construction and fitting out of infrastructure for Phase 3, and
“infrastructure” for these purposes shall be deemed to refer to all or any (as applicable) of
the types of items set out in Schedule 1, paragraph 2 of the Development Agreement
(“Infrastructure Works – General Scope”) and generally to physical services and facilities
reasonably required to build and operate the Development or any part thereof in the
manner and to the standard contemplated by the Development Agreement.
PROVIDED THAT if the Developer fails to give at least 7 days notice prior to the
importation of any article the Collector of Customs shall be entitled to charge customs
duties at the full rate in respect of such article AND PROVIDED FURTHER that duties
on articles imported may become payable as provided by Section 9 (1) of the
Encouragement of Development Ordinance in the event of their being disposed of in any
manner within five years from the date of importation.
9B.2 In relation to Phase 3, the Developer (or its applicable Affiliate, as the case may be) shall
be entitled to a reduction in stamp duty of 50% of the then-prevailing rate on land
transfers and leases (i) to the Developer or any of its Affiliates, and (ii) to buyers of
residential parcels (including strata and built lots) from the Developer or any of its
Affiliates, which are presented for registration in the Land Registry during the
period of five years from the date of this Order.
Cessation of benefits and recovery of duty
10.
(1) If at any time after the date of making of this Order the units within the
Development which are designated or intended for use as accommodation from
which the Government derives revenue under the Hotel and Restaurant (Taxation)
Ordinance are not used or cease to be used for the purposes of such
accommodation other than by reason of force majeure or by reason of seasonal
closure (such not to exceed three months in any given year), the Developer shall
pay to the Government the amount of taxes, capital levy, or customs import duties
which the Developer would have paid if it had not been for articles 9A or 9B.
(2) The rate of interest referred to in paragraph (3) shall be 4% above Barclays Bank
plc’s base rate from time to time; and
(3) interest on that amount at the rate specified in paragraph (2) for the period
beginning with the date on which the taxes, capital levy or customs import duties
would have been paid if it had not been for article 9 or the date when a unit which
has been used as accommodation from which the Government derives revenue
under the Hotel & Restaurant (Taxation) Ordinance ceases to be so used
15349797\1 -6-
whichever is the later and ending not later than the date on which the taxes,
capital levy or customs import duties are paid.
(4) Nothing herein shall be construed so as to entitle the recovery by the Government
from the Developer of taxes, capital levy or customs import duty benefits or
concessions afforded to Logwood Hotel Development Company Ltd or Logwood
Development Company Ltd.
Made this 8th day of February 2013.
DAMIAN RODERIC TODD
GOVERNOR

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