The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has indicated that the frequency of Value-Added Tax (VAT) filings will be based on a company’s annual turnover, which was yesterday interpreted by some as further proof of “how onerous” the new tax is.

The Bahamas Hotel and Tourism Association (BHTA), in a briefing issued to members, said a recent meeting with the Ministry of Finance had revealed the Government’s intention to link VAT return/payment filings to turnover.

According to the BHTA, companies with a gross annual turnover that exceeds $5 million will have to submit monthly VAT returns.

Those with an annual turnover between $400,000 and $5 million will have to file quarterly VAT returns, with VAT registrants earning less than $400,000 in annual sales having to file twice yearly or once every six months.

It thus appears that the Government is moving to make good on its promises to reduce the reporting burden on small and medium-sized Bahamian businesses who meet the VAT registration threshold, will also reducing the bureaucracy it will face at its end.

Businesses will also have the option to file more frequently than their mandated minimum.

“It is the intention of the Government to allow for online registration and filings. The required frequency of filings will depend upon a business’s annual turnover,” the BHTA told its members.

Not everyone was impressed, Rick Lowe, an executive with the Nassau Institute think-tank, which contracted the first study alerting Bahamians to the potential pitfalls with VAT, said it again showed that the report’s author had been right all along despite government attempts to discredit him.

“It proves how onerous VAT is. It’s not a simple process,” Mr Lowe told Tribune Business. “They figure they need to give the smaller guy more time.

“They’re confirming more and more that what was in the Nassau Institute report, and everything they denied, is turning out to be true.”

Meanwhile, BHTA president Stuart Bowe called on all tourism businesses to start their VAT planning now “to avoid costly delays and transition challenges”.

He said: “We have expressed appreciation to the Prime Minister for delaying VAT’s implementation and reducing the proposed VAT rate from 15 per cent to 7.5 per cent, including the change of the present 10 per cent room tax to a 7.5 per cent VAT.

“Likewise, we have identified a number of serious concerns that impact the tourism industry based on the proposed VAT, which need resolution to prevent a significant decline in the industry’s price competitiveness.”

He added: “We continue to deliberate with Government to release the draft legislation, regulations, Customs duty schedules and guide notes well in advance of January 1.

“Businesses should not sit back and wait for these items to be in place. We encourage all stakeholders to utilise this time to gain more knowledgeable on VAT and to plan for its implementation wherever possible.”

The BHTA said it was seeking representation on the three-person Task Force that the Prime Minister said would be formed to lead the VAT education campaign.

Mr Bowe said businesses should focus on what they can do now, until the details of Customs duty schedules and regulations are released.

The BHTA advised: “Members should be reviewing their accounting and recordkeeping systems to ensure they will be able to track and record daily operational transactions.

“This is particularly important for small businesses which may not currently be tracking and capturing all this information. If the systems are not in place, a business stands to pay far more in VAT than they should, or not be able to fully claim input credits. This is effectively a form of double taxation.

“In addition, businesses should identify any organisational literature pieces that require language changes or indicate whether VAT is included or not.

“For example, the Government has communicated that some types of transactions, possibly food and beverage, may be posted inclusive of VAT. This type of example will be finalised when the regulations are released,” the BHTA added.

“Businesses which computerise sales transactions will need to modify point of sales systems. This may be a simple software adjustment or may entail extensive changes for larger businesses.”