• Bahamas VAT system proposed for 2015


    According to Bahamas' latest Budget for 2014/2015, released on 28 May 2014, VAT will be introduced from 1 January 2015.

    In addition, to delaying the implementation to 1 January 2015, the basic rate is to be reduced to 7.5% (from previous proposals of 15%).

    In accordance with the budget, the key features of the proposed Bahamian VAT are as follows:

    • There will be one single VAT rate across the board (other than the zero rate for exports) that is being substantially reduced to 7.5% from the originally proposed 15%.

    • Along with the significantly reduced VAT rate, the Ministry of Finance is proposing much fewer exemptions. The full list of these will be released shortly.

    • To allow sufficient time for the needed more in-depth public education campaign and private sector preparation, the VAT will come into effect on 1 January 2015.

    • The Ministry of Finance is now proposing a regime of VAT-inclusive rather than VAT-exclusive pricing. This is to simplify price comparisons by consumers, especially when navigating between VAT registrants and non-registrants. The price consumers see will always be the price they pay.

    • From a cash flow perspective, there is also a proposal for businesses that qualify for fiscal incentives on imports to have more control over the timing of recognizing certain VAT liabilities through payment mechanisms.

    • The Ministry of Finance is proposing less cumbersome cash basis accounting procedures for small businesses, and overall less complex procedures for tax credits against bad debts and streamline the VAT refund process, having regard to the need to be vigilant against fraudulent claims.
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