Bahamas Introduces Value-Added Tax
by Jason Gorringe, Lowtax.net, London
05 January, 2015
The Bahamas' new value-added tax (VAT) regime, featuring a 7.5 percent headline rate, was introduced in the territory from January 1, 2015.
Noting the long-awaited implementation of the regime, the Bahamas Government said it had begun compliance checks immediately to ensure compliance by VAT-registered businesses and to tackle abuse.
All businesses with taxable sales of BSD100,000 (USD100,000) or more were required to register by November 30, 2014.
Ahead of the introduction of VAT, the Government updated much of the guidance that it has released to date, including its specific industry guides, its guide on the completion of VAT returns, its main VAT guide, and its guidance on transitional arrangements.
VAT was proposed to be introduced in the Bahamas to broaden the territory's tax base in anticipation of its accession to membership of the World Trade Organization, which will require that the territory substantially reduces its trade tariffs. Alongside, the introduction of VAT, the territory has introduced a broad range of reductions to custom and import tariff rates, also effective from January 1, and has newly released guidance on these changes.
Duty has been removed on a number of items – mainly construction materials – that had previously been subject to a seven percent rate; duty on a number of items that had been subject to a ten percent rate has been halved; and other rates ranging from 25 percent to 45 percent have been cut to as low as 5 percent.
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