What is VAT?

Value Added Tax (VAT), is an indirect tax which is considered broadly based consumption tax charged on the value added to goods and services.  It applies to almost all goods and services that are imported, bought and sold for use or consumption.  Conversely goods exported supplied to customers abroad are exempted or zero-rated. 
 

Why VAT?

Since the coming on stream of the Free Trade Area of the Americas (FTAA) and The Bahamas’ impending accession to the WTO,  the Government can no longer look towards the Customs Division to contribute the same share of revenues that it presently brings in. Reform is therefore needed to strengthen tax administration and ensure that there is no significant loss in revenue.

VAT in the Bahamas is therefore being introduced against the backdrop of:-

• Government’s desire to undertake a programme of Tax Reform for the administration of its tax and non-tax revenue collections
• Broadening the tax base and making it more equitable by including both goods and services
• Bolstering revenue collections to meet the increasing demands to provide efficient public services to its citizens and meet other financial demands of the Government

What is the Rate that VAT will be charged at?

There are two VAT rates: Standard Rate 10 -15% on most supplies of goods and services, and Zero-Rate (0%) on a specific list of transactions.