NASSAU, The Bahamas – Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest said it was “absolutely important” that he provided clarity after the “unfortunate and misleading commentary” with respect to his statement circulated on Tuesday, August 7, 2018, to the media addressing concerns related to Real Property Tax changes. 

“The Government of The Bahamas made no undertaking to reduce any tax rate for any individual or any group with the announced decision to revert to the previous definition of owner-occupied properties,” the Deputy Prime Minister said during a press conference at the Ministry of Finance, Wednesday, August 8, 2018.

“For Real Property Tax, the government undertook to increase the top end for undeveloped land owned by foreigners,” he said.  “This is what was announced in the Budget Communication.  This is what will remain.”

Deputy Prime Minister Turnquest said what the government is undertaking to change is the amendment that quantified the time frame for owner-occupied property. 

“This is being done simply because that amendment had the unintended impact of bringing legitimate and non-commercial home ownership under the commercial property tax rate.  And that was not the intent.”

He said that in none of the Budget speeches or other communication is there any reference to increasing Real Property Tax on second home owners.  Nor on any other developed property.

“And no such tax increase was intended nor reflected in the budget estimates approved by Parliament.  As such, the correction in the language in respect to the amendment with the Budget bills will have no effect on the projected tax income for the country,” the Deputy Prime Minister said.

He explained that part of the policy issue the government tried to address in the amendment that was passed in Parliament was to make a distinction between seasonal and legitimate second homeowners, that being those persons who use their properties not only as a personal second home but also to rent to other visitors versus those who just maintain a second home strictly for themselves and their family.

“That change unfortunately making it seasonal versus six months, threw a category of second home owners into this commercial category, which was not intended.

The DPM said what the Government intends to do and what it intended to do was to differentiate between persons who are legitimate owner-occupied versus those who treat their property as a rental property, because the rental property should register as a business and they should attract value added tax.

“So it is our intent to revert to the previous position for owner-occupied property as a definition, but also to require that persons who are in fact renting their homes, to register, to pay business license fees and pay value added tax going forward.

DPM Turnquest said, “So that is the basic clarification we are trying to address by making the amendments we forecast.”

Among other ways of monitoring such activities, the government intends to utilize local government in the Family Islands as well as create mechanisms within the Ministry, which include tracking through online companies that cater to Airbnb.