The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday pledged the Government’s new “OneTax” portal will make paying taxes easier and simpler as he hailed the revenue generated by enhanced compliance and enforcement efforts.

Philip Davis KC, unveiling the mid-year Budget in the House of Assembly, asserted that the Department of Inland Revenue (DIR) is “taking a big step toward digital progress” via a new online portal that will make tax payments and their administration more efficient for all parties involved. He added that the tax authority is working with the KPMG accounting firm and an Indian company on the initiative.

“We’re taking a big step toward digital progress with the OneTax Bahamas Portal, a new online platform that will make paying taxes easier for everyone,” the Prime Minister said. “We’ve partnered with KPMG and LTI Mindtree Ltd, a technology company from India, to build a simple and efficient system that will help the Department of Inland Revenue work better and more transparently.

“This will make it easier for businesses and individuals to pay their taxes, improve collections and reduce paperwork. By using the latest technology, we’re making the tax system more efficient and accessible, helping with national growth and better tax compliance.” 

While businesses will welcome any online portal that reduces the stress associated with filing tax returns, and making VAT, Business Licence and real property tax payments, they are likely to be wary of further reforms and changes especially coming so soon after the problems encountered with the Department of Inland Revenue’s current online portal when it was first introduced in 2024.

Meanwhile, Mr Davis reiterated his complaint that the Government is not gaining its rightful revenue from VAT levied on high-end property sales - especially commercial buildings and those owned by foreigners. And he added that his administration was seeking to implement a real property tax relief initiative for individuals and families genuinely needing “financial assistance” but provided no details.

Real property tax revenues increased by 45.2 percent year-over-year during the first six months of the 2024-2025 financial year to hit $68.6m, equivalent to 29.8 percent of the full-year forecast. “This rise was driven by an 83.4 percent increase for collection of property taxes on commercial property, and a 77.9 percent increase from property taxes collected on foreign-owned undeveloped land,” Mr Davis said.

“Compared to the same six-month period three years ago, property tax collection this year has doubled, growing by $31.8m.” He added, though, that the Government is seeking to implement tax relief for those struggling to meet their tax obligations while, at the same time, tightening the enforcement net on high-end property owners who it suspects of evading/avoiding VAT on the purchase.

“This administration is dedicated to implementing a property tax relief programme, designed specifically to provide assistance to individuals and families who find themselves in genuine financial need. Ultimately, this effort is part of a broader commitment to enhance the quality of life for all citizens and to foster a more inclusive economy where everyone has the opportunity to thrive, regardless of their financial circumstances,” Mr Davis said.

Then, turning immediately to compliance, the Prime Minister added: “Over the past three years, the real estate sector has publicly and consistently highlighted a growing interest in Bahamian properties. During this period, one real estate company has enjoyed over $2bn in sales.

“Despite such growth, the anticipated benefits have not been reflected in the Government’s fiscal accounts, particularly as the VAT on real estate has underperformed. At present, the most straightforward means of establishing property ownership in The Bahamas involves the payment of VAT on real estate and the proper registration of property documents.

“Regrettably, many individuals have overlooked these essential steps, resulting in significant revenue losses for the Government due to the failure to formalise property ownership.” To crack down on tax avoidance, Mr Davis said the Department of Inland Revenue is now “logging and tracking” VAT due on real estate transactions.

It is also collaborating with Bahamian real estate agents “to determine property ownership, verify if a property has been sold, and to ensure that there are no taxes outstanding as it relates to real estate transactions”. And, before approving residency permits for foreign real estate buyers, the Department of Immigration has to require that all conveyances are stamped to prove VAT has been paid and a tax assessment number is attached.

Mr Davis disclosed that the recent “amnesty” for VAT and, before that, Stamp Tax owed on real estate conveyances not brought forward for stamping and payment of due taxes had netted the Government an average $7,760 from 816 persons. This sum, he added, showed that few large or high-value properties had come forward.

“During the first half of the current fiscal year, a total of 1,679 conveyances were processed for VAT stamp tax. Companies and foreign individuals together represent 42.3 percent of these conveyances, and account for 79.4 percent of the total revenue from VAT stamp tax on conveyances,” the Prime Minister added. 

“In contrast, Bahamian companies and Bahamian individuals together contribute only 20.6 percent of the total revenue collected from this tax. These statistics are important because they show that VAT on real estate, as well as property taxes, are primarily incurred for and paid by foreign owners.

“For instance, the average VAT on real estate paid by a Bahamian is $9,133 whereas the average paid by a foreign owner is 11 times as much at $104,384.... For the first half of the current fiscal year, a total of 1,679 conveyance documents have been processed for VAT. Of this, foreign companies make up only 9 percent of the total but contribute 52.2 percent of the total revenue collected from the VAT stamp tax on conveyances.”

Mr Davis continued: “These figures really show why enforcement for VAT on stamp tax is so important. The buoyancy of the high-end real estate market should accurately be reflected in the Government’s revenue receipts. Since the highest level of payment for taxes on real estate are paid by foreign owners, it is increasingly vital for the Government to ensure that it is capturing the full potential of this revenue stream.

“What is owed to the Government and the people of The Bahamas should be paid, especially by those who can afford it. Proper enforcement of VAT on stamp tax not only helps maintain the integrity of the tax system, but also ensures that the benefits sought out by foreign owners from a thriving real estate market in The Bahamas are realised in terms of increased government revenue.

“This revenue is essential for funding public services and infrastructure, and contributing to the overall economic well-being of The Bahamas. This is why it is imperative that measures are put in place to enhance compliance and effectively monitor transactions regarding real estate.”

Elsewhere, Mr Davis said the Department of Inland Revenue had identified some $124.2m in outstanding taxes and fees from 60 field audits. And its Large Taxpayers Unit, which covers 118 entities and 53 affiliate companies generating 39 percent of VAT revenue, has seen those firms achieve 94 percent compliance on full payments and the timeliness of their filings.

“By the end of 2024, the Department of Inland Revenue completed 274 desk audits, which are detailed reviews of tax returns and financial records of taxpayers done remotely. This process has identified $3.5m in taxes to be settled,” the Prime Minister added.

“Additionally, at least 60 successful field audits have been completed, which involve on-site examinations of taxpayers’ financial records and operations. As a result, a total assessment value of $124.2m in outstanding fees and taxes has been discovered, with VAT accounting for 95 percent of this amount. Mr deputy speaker, we are confident that this sum is fully collectable.

“As at December 31, 2024, the Large Taxpayers Unit, established within the Department of Inland Revenue in 2023, monitors a total of 118 large taxpayers and 53 of their related companies, which represents less than 1 percent of all taxpayers but accounts for 39 percent of our VAT revenue,” he added.

“We can report that since establishing the Large Taxpayers Unit, the compliance ratio of these large taxpayers has averaged 94 percent for on-time filings and remittance, which is higher than the remaining businesses.

“Establishing the Large Taxpayers Unit has enhanced the efficiency of our tax administration through providing specialised services and ensuring that large businesses contribute fairly and transparently in payment of all taxes.”

Mr Davis said the Maritime TaskForce has contributed $20m in revenue through the “inspection of vessels, recovering outstanding commercial dock fees and reassessing coastal properties” as well as Immigration-related enforcement. And import duties and processing fees collected by Bahamas Customs increased by $6.5m year-over-year during the 2024-2025 first-half due to improved enforcement and collection.

“We have seen an increase of just over 5,000 declarations processed, with import declarations accounting for 82 percent of the increase this current period compared to last year. To improve even more, we’ll use technology like artificial intelligence (AI) and automation to make our processes faster and more efficient,” Mr Davis said.

“AI will help us spot fraud, detect under-reporting and fight smuggling. We’ll also use a risk-based approach, focusing inspections on higher-risk imports to ensure better compliance and a stronger Customs system.”