Bahamas Issues VAT Compliance Update
by Jason Gorringe, Lowtax.net, London
07 January, 2015
The Bahamas Ministry of Finance has released an update on compliance with its new 7.5 percent value-added tax (VAT) regime, which entered into force on January 1, 2015, with more than 5,000 businesses said to have registered to date.
In its update, the Ministry encouraged businesses and consumers to be vigilant about illegitimate operators charging VAT, warning that anyone who is not registered and caught issuing invoices or receipts that show VAT charges could face severe fines and criminal prosecution. The Ministry warned that VAT refund claims for purchases from businesses not registered for VAT will be rejected and therefore businesses must make sure that they receive valid receipts and invoices that show the amount of VAT being charged and the tax identification number (TIN) of the seller.
The Ministry did note however that most VAT registrants have until February 28, 2015, to complete changes to their accounting systems to issue fully compliant receipts and invoices. Nevertheless, there is no grace period for disclosing the amount of VAT that is charged or the TIN.
On pricing, the Ministry noted that the price of some goods will rise, even for supplies issued by businesses that are not VAT registered, as these firms now face VAT-related increases to their operating costs. However, the price of some goods, and in particular household appliances and building materials, will fall as a result of reductions in customs duties that were implemented alongside the introduction of VAT.
Price control regulations allow businesses to display dual prices (inclusive and exclusive prices) for up to two months, to allow time for VAT-registered businesses to begin displaying VAT-inclusive prices. In the interim, registrants must display posters or other signage to indicate the inclusive prices. Consumers must pay the higher tax-inclusive amounts.
The Ministry said that, as of January 1, it had processed registration applications from 4,930 businesses, with a number of applications to be processed that will bring this number above 5,000 within days. It said most applications recently have been voluntary submissions from businesses with an annual turnover below the registration threshold of BSD100,000 (USD100,000).
"Still, more than 400 other applications are unprocessed despite follow up from the VAT Department with all of them by telephone and email," said a Ministry spokesperson. "It is mainly because these applicants have neither produced business license documentation nor availed themselves of the fast-track procedures that have been offered." The Ministry urged any business that has failed to register to swiftly conclude the registration process to minimize the applicable penalties incurred.
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