Just three and a half years after value-added tax (VAT) was introduced in The Bahamas at a rate of 7.5 percent, the government voted to raise the tax to 12 percent, effective July 1, according to The Nassau Guardian. The announcement was made by Minister of Finance Peter Turnquest.
Turnquest said the increase is meant to address the country’s fiscal issues and help the government avoid a crisis.
The Nassau Guardian also reports, however, that after consulting with Bahamas Hotel and Tourism Association (BHTA), the government has allowed hotels and resorts with prior bookings at the 7.5 VAT rate to honor that rate with their clients and to log those bookings with the Department of Inland Revenue.
The BHTA expressed concerns about whether the industry would have enough time to make the necessary changes in the one month provided by the government before the increased VAT came into effect and whether that raise would affect their prior bookings, especially with groups who are locked in at a contracted rate.
The Ministry of Finance explained to the hotel sector: “Any material bookings, pre-booked, pre-paid bookings, groups, contracts and agreements for travel, rooms, facilities and package deals made with the resort or with agents of the resort, third party sellers/bookers of travel and accommodation prior to September 30, 2018 for travel through June 30, 2019 will be honored at the 7.5 percent VAT. The resorts will be required to furnish specific summary details of such bookings to the Department of Inland Revenue by October 31st 2018 in a format to be prescribed by the department.
“Groups – any material bookings, pre-booked, pre-paid bookings, contracts and agreements for travel, rooms, facilities and package deals made with the resort or with agents of the resort such as third party sellers/bookers of travel and accommodation, between now and July 31st 2018 for any point in the future (post-June 30th 2019) will be honored at the 7.5 percent VAT. The resort will be required to furnish specific summary details of such bookings to the Department of Inland Revenue by August 31st, 2018 in a format to be prescribed by the department.”
VAT was first introduced in The Bahamas in January 2015 under Perry Christie, who served as prime minister of the Bahamas from 2002 to 2007 and from 2012 to 2017.
Turnquest also announced a significant increase in gaming house taxes through the introduction of a sliding scale of rates applied to taxable revenue.
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