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Ginn sur Mer Bahamas

Ginn Exemptions Revealed

By Quincy Parker

Reprinted from The Bahama Journal, Oct. 4, 2007

True to his campaign promise, Prime Minister Hubert Ingraham on Wednesday tabled the heads of agreement governing the Ginn sur Mer development in West End, Grand Bahama, finally allowing an examination of the exemptions the government agreed to grant the company in respect of the multibillion-dollar development.

The Ministry of Finance usually calculates the savings on customs duty concessions for hotel developments at between 35% and 40%. In addition, the Ginn agreement includes stamp tax concessions in certain limited circumstances, meaning a further 7% exemption.

That means that the Ginn developers are saving a minimum of 35% and up to 47% of the cost of their development in tax concessions.

Ginn's original projected outlay was $3.7 billion, and after some months, the company upped its projected expenditure to $4.5 billion, pumped into the Bahamian economy in three phases over a 20-year-buildout period.

The development envisions about 870 residential units, 4,400 hotel or condo-hotel units, two golf courses, two marinas and a casino.

Taking off from the Ministry of Finance's calculations, the concessions granted to the Ginn developers could range from $1.575 billion (already more than the entire 2006/2007 budget) to $2.115 billion.

In addition to the customs duty concessions under the Hotels Encouragement Act, the Ginn developers were granted special concessions, like accelerated consideration of applications for annual or permanent resident status to "fit and proper owners who fall within the policy of the government."

The government also promised to "use its best efforts" to procure accelerated consideration of applications for Approved Investor Status for purchasers at the Ginn project.

The government even promises to work with Ginn and lenders to facilitate access to financing for purchasers of the project.

While the concessions granted are significant, a control mechanism was envisioned in the agreement, expressly tasked to monitor the exemption from customs duties.

"Ginn and the government, through the Ministry of Finance and the Department of Customs, will put in place a system to adequately monitor the exemption of customs duties as set out in [the] heads of agreement," the document reads, "and to prevent any abuses relating thereto throughout the term of this heads of agreement."

Ginn sur Mer

Part Two of the heads of agreement between the government of The Bahamas and Ginn-LA West End (a Bahamian company formed for the purpose of administering the project) deals with "exemptions from customs duty, stamp duty, business license fees and other taxes."

The agreement labels all hotels, condo-hotels and all other units in the hotel rental programme, and the infrastructure and resort amenities and project infrastructure as "the Exempt Components."

Ginn and the government agreed on December 9, 2005 that golf courses, clubhouses, marinas, marina clubs, restaurants "resort amenities."

As a concession under the Hotels Encouragement Act, the agreement exempts from customs duty "all materials necessary for the construction, equipping, furnishing and completing of the development of the project."

"The items subject to such exemption shall specifically include construction materials, bunker oil and diesel, gasoline, aviation fuels, furniture, fixtures and other equipment required for construction and equipping of all aspects of the Exempt Components," the agreement said.

"Similar exemption shall be given for the fire truck, ambulance and other items of equipment for the initial equipping of any necessary fire and ambulance stations."
The agreement provides for Ginn to import and export all construction plants, vehicles and trailers and other portable facilities needed for the engineering and surveying of the project to also be imported duty-free.

"No stamp tax shall be payable by Ginn in respect of the materials, equipment and furnishings for the development of the Exempt Components, including without limitation, materials, equipment and furnishings for engineering, surveying and planning for the project," the agreement said.

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