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  • Service: Tax, Global Indirect Tax
  • Type: Business and industry issue
  • Date: 6/24/2013

Bahamas – VAT to be introduced in 2014 

GITB June 2013 - Bahamas
On 30 May 2012, the government of The Bahamas (during its 2012/2013 Budget Communication) announced its plans to address tax reform in The Bahamas.

A white paper on tax reform was later prepared and issued on 13 February 2013 as the basis of public discussion and consultation on how the government proposed to broaden the current “narrow” tax base to extend it to not only include taxation of goods but also services.


The government’s objectives in tax reform as stated in the white paper are:


  • to secure an adequate revenue base in support of modern governance
  • to establish a tax structure that promotes economic efficiency and stronger economic growth
  • to make the tax system more equitable.

To that end, the white paper expressed the introduction of VAT as of 1 July 2014 at a rate of 15 percent. It also proposed the reduction of both import duties and excise tax rates and to eliminate business license tax (but require a minimal annual business license fee) and elimination of hotel occupancy taxes (which will be substituted with VAT). The Bahamas is scheduled to accede to The World Trade Organization (WTO) in 2014 but to do so must reduce current high import duties and excise taxes which are viewed as a barrier to trade by the WTO.


The government has also informed that the threshold criteria to become a VAT Registrant will be 50,000 Bahamian dollars (BSD) turnover per annum. It has been stated that about 3,798 businesses (which account for 98.6 percent of total turnover in the economy) will qualify as VAT Registrants.


Further, certain industry sectors will be exempted from VAT, including financial services, agriculture and fisheries, social & community services, health and education and leases on land and residential buildings will also be exempt. Only exported goods will be zero rated. The white paper also addresses VAT refunds, returns, accounting records, transitional issues, offences and penalties for non-compliance, objections and appeals. Additionally businesses that currently enjoy fiscal concessions will continue to have those concessions but will be subject to VAT on imports and domestic purchases. Finally, the government also proposed to establish a Central Revenue Agency (CRA) which will be responsible for VAT administration.

 

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Global Indirect Tax Brief: June 2013

GITB: June 2013
Articles in this edition highlight the increasing importance of indirect tax as one of the most important sources of revenue for governments around the world.

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