The Tribune

More than 60 members of the Bahamas Financial Services Board (BFSB) packed a meeting room at the Ministry of Finance for an open discussion on the Government’s proposed Value-Added Tax (VAT).

For senior lawyers, bankers, asset and wealth managers and others, the two-hour meeting with Financial Secretary John Rolle was an opportunity to seek answers to specific questions. Those questions ranged from wanting to know if VAT would be levied on services offered by companies with a physical presence in the Bahamas, but no local activity, to whether rent paid on housing for an expatriate staff member would be VAT-able.

“In both of those instances, we were able to reassure the financial services industry that VAT would not apply in their cases,” said Mr Rolle.

“In the first instance, there is no service being conducted or performed in the country, so the company would receive full credit on any VAT paid on that part of their operations, while not having to charge their clients VAT for any such services.

“In the second instance, housing is residential, so no matter who pays the rent, it is ultimately VAT-exempt as a residence.”

While that particular housing will be VAT-exempt, the Government has stated its intention to strengthen real property tax assessment and collection as another arm of revenue generation.

The financial services professionals present, though, urged the Government to simplify the language in the draft legislation and accompanying guide.

“In our business, they say if a client can understand the way we write in a set of documents, we haven’t done our job,” said Graham Thompson senior partner, Dana Wells.

“Now, I understand how they feel. We have had people in our office review the draft legislation and go back and forth with the guide, and now we ask: ‘Can you please write this in a way we can understand what it says?’”

The Financial Secretary said explanatory material was being developed to address those concerns.

“We were really pleased with the turnout, and also with the fact that the questions were specific,” said Mr Rolle. “I believe that the business community is getting a clearer picture of VAT and understanding why it is a necessary step as the country rebuilds its financial standing.

“The questions are beginning to be much less about ‘Why VAT?’ and much more about ‘How will this affect me or my business?’ or ‘How do we do such and such?’

“Over the next few months, as we roll out more information and begin the registration process, it will become a lot easier to grasp. We are just not accustomed to paying taxes in this country, so it is easy to understand the scepticism, but meetings like this go a long way in opening up the lines of communication.”

The Ministry of Finance has a full calendar of presentations and meetings scheduled for the next month.