In its budget for 2012/13, the Bahamas Government has announced that it will introduce a value-added tax (VAT), to broaden the tax base, from July 1, 2014.
The Government explained that VAT is to be introduced to offset the eventual reductions to import duty rates that will accompany the Bahamas’ accession to the World Trade Organization, and to begin to consolidate the territory’s finances.
From July 1, 2014, the Bahamas will apply a 15% VAT to a broad range of goods and services – the median rate in other Caribbean territories that have implemented VAT.
VAT will replace the Hotel Occupancy Tax, but a concessionary rate of 10% will apply to the business of hotels, including food and drink sold on their premises.
Excise duties will fall by around 15% on goods that will be subject to VAT when the regime is introduced.
A zero rate will apply to exports and the international transport of goods and passengers. Exempt goods and services will include:
• Food and agricultural products that benefit from duty-free status under the Tariff Act;
• Other imports that benefit from the same, aforementioned status;
• Health and education services;
• Transfers of leases of land and residential buildings;
• Financial services;
• Social and community services.
VAT filing and payment will be required on a monthly basis, and the VAT threshold will be set at USD50,000 – requiring 3,800 local businesses to register to collect and remit VAT revenues to the Government.
By Phillip Morton
Investors Offshore.com