John Rolle, Financial Secretary for the Ministry of Finance recently met with over 70 members of the Bahamas Hotel and Tourism Association to provide an overview of how VAT would work and address some of the questions and concerns raised by tourism industry stakeholders.
Rolle provided background information in support of the Government’s goal to implement the new tax and walked members thru the process, explaining that downward adjustments would be made to the current duty schedule, the key concepts of zero rating and exempt sales, and how a credit system would work for taxes paid previously on inputs.
In response to concerns about not having sufficient information yet to analyze the impact of VAT to allow time for businesses to plan accordingly, Mr. Rolle was hopeful that the draft legislation with the revised duty schedules and supporting information would be available to the public within the next several weeks. He indicated the Government intends to allow two months for consultation, with enactment slated by the turn of the year. Attendees were advised that the Government is still targeting an implementation date of July 1, 2014
BHTA members also raised questions and concerns regarding uncertainties about whether VAT would apply to gratuities and fees tied to room charges, and other services within a hotel’s property.
BHTA President Stuart Bowe indicated that a number of questions and concerns affecting the tourism industry have been brought to the attention of Mr. Rolle and the Ministry of Finance over a series of meetings since last March. “We’ve welcomed the opportunity for constructive dialogue with the Financial Secretary and the Ministry around a range of issues associated with VAT. While VAT will affect every business and individual in The Bahamas, it is especially important that we pay close attention to the impact on the tourism industry” adds Bowe.
“Because tourism is essentially an export business, many nations with VAT have treated it differently, recognizing the importance of being competitive in order to attract foreign revenue, and create a multiplier effect to benefit the broader economy. Thus far the Government has recognized this and we will need to continue to work towards minimizing the impact of VAT on the cost of doing business and our global competitiveness” according to Bowe.
Bowe echoed the concerns raised by others about the targeted implementation date. “We remain concerned about the readiness capacity of both the public and private sectors for a July 1, 2014 implementation date. Should this date be hard and fast, it underscores the critical importance of working closely together on a range of readiness activities” states Bowe.
The Bahamas Hotel and Tourism Association