Business readiness is the key to minimizing the expense and challenges of converting to a Value Added Tax scheme, particularly for small and medium-sized businesses according to Bahamas Hotel and Tourism Association President Stuart Bowe.
“BHTA welcomes the delay in implementing a Value Added Tax which will allows adequate time for the public and private sectors to do the planning, training, and operational conversions necessary for the transition” states Bowe.
“We have reached out to the Ministry of Finance in recent months and expressed our desire to work together towards the tourism industry’s VAT implementation. This will be particularly important for our Family Island and small and medium sized businesses. Failure to plan will place an added financial and operational burden on businesses and could prevent the Government from realizing its anticipated revenue” according to Bowe.
His concerns are backed up by a survey BHTA conducted earlier this year showing that only 22 percent of the respondents indicated that they had a full understanding of how a VAT works. Beyond their desire to understand new legislation, accompanying regulations, and reporting requirements, businesses cited the need for understanding the necessary changes to accounting and inventory systems, installing new point-of-sales systems, revising contracts and menus, and training staff well in advance of VAT’s effective implementation date.
Businesses also expressed concerns about transition matters affecting purchasing, inventory management, and existing business contracts. “Not being prepared for the transition could place a much higher financial burden on businesses. We are moving quickly to prevent an ineffective conversion process” states Bowe.
“It is essential that we mobilize our forces with the Ministry of Finance and other private sector organizations to put in place a collaborative readiness plan. We were impressed by the approach undertaken by New Zealand where the private sector was well-engaged in the readiness process, helping to write the plan and facilitating its delivery. We look forward to a similar engagement with the Ministry.” according to Bowe.
Bahamas Hotel and Tourism Association