The Tribune

By KHRISNA RUSSELL

Tribune Chief Reporter

krussell@tribunemedia.net

GOVERNMENT tabled an amendment to the value added tax legislation in the House of Assembly yesterday, outlining the planned rate change to 10 percent from the current 12 percent.

The amendment outlines the removal of the zero-rated application from several items. These include the local sale of butter, bread, mayonnaise, grits, cheese, corned beef, evaporated milk, condensed milk, margarine, rice, flour, tomato paste, cooking oil, baby formula and baby food, powder detergent, fresh milk, canned fish, soaps, soups and broths.

The list also includes mustard, sanitary napkins and tampons, napkins and napkin liners for infants.

The local sale of medicines and medicinal drugs will also now have VAT applied at the point of sale.

Further, the amendment says the zero-rating will be removed from the importation of replaced or repaired goods and services related to the use of terminal or bathing facilities by commercial vessels in respect of goods that have not been entered for home consumption under the Customs Management Act where the origin and port of destination are not within The Bahamas.

The same applies to commission earned as a result of the supply of the Central Bank of The Bahamas’ digital service.

The Bill also adds financial services to the list of zero-rated professional services when the benefit or advantage of those services are outside of The Bahamas.

According to the Bill the amendment additionally seeks to limit the scope of the zero-rated application by excluding international transport services attributed to privately owned and operated chartered vessels and carriers that leave port in ballast form from international commercial service.

There is also a provision to limit the zero-rating by providing that ancillary services are only included in the definition of international transport service where such services are supplied by the supplier of international transport services for or on behalf of such supplier as part of the same journey to which the supply of international transport services relates.

The reduction of VAT to 10 percent was a Progressive Liberal Party campaign promise.

However, its decision to place VAT on items that were made VAT-free under the former Minnis administration was met with mixed reviews.

Former State Minister for Finance Kwasi Thompson is among the critics.

Last month he said the Davis administration will be hurting the most vulnerable people in society when it reintroduces value added tax on breadbasket items.

Prime Minister Philip “Brave” Davis announced in the House of Assembly last month that while his administration will reduce VAT to ten percent across the board, it will also increase the VAT rate to ten percent on a variety of items that had been zero-rated under the Minnis administration. Exceptions to this policy include VAT exemption for electricity bills and special economic zones.

However, the policy shift means VAT will return to such items as baby food, bread, butter, grits, rice, soap, corned beef and various medications.

Mr Davis noted that experts have long said the government should strive to keep the VAT rate as broad as possible and exempt few, if any, items from the tax. This, experts say, would help the government keep the overall rate as low as possible while maximising returns.