Tuesday, March 11, 2014

The impact of an implemented Value Added Tax (VAT) in The Bahamas

'Year To Adjust' To Vat, Warns Businessman

Tribune Staff Reporter
Nassau, The Bahamas

A DOWNTOWN businessman believes it would take the Bahamas at least a year to adjust to the impact of Value Added Tax if it is implemented this July.

Although it was not an official declaration that VAT will be off the table, Finance State Minister Michael Halkitis told the media that the government will now consider revisiting all proposals in the wake of the proposed regularisation and taxation of web shops.

Dennis Halamino, the proprietor of the Tropicana Club and the Casablanca bar, told The Tribune, however, that if VAT is implemented, “it’s going to take about at least a year for the country to adjust to the change.”

“I hope they know what they’re doing because they’re taking a big risk,” he added.

In Parliament last week, Tourism Minister Obie Wilchcombe announced that the Government will regularise and tax webshop gaming by July 1 after more than a year of speculation following the “No Vote” in the 2013 Gaming Referendum.

Mr Wilchcombe revealed that the government will bring regulations to the House of Assembly within the next two weeks that will legalise the industry.

Following this, Mr Halkitis told the press that if the government is able to “realise revenue” from webshop gaming then it could possibly “relax” on other revenue raising measures.

“Based on the system as it is, if we can implement the regulation of the web gaming and begin to realize revenue from it, then we may have the opportunity to revisit all the proposals that we have to determine okay, if we now can get ‘X’ amount of revenue from here, does that give us flexibility to relax on this other side, and that’s a conversation that we will have,” he said.

Mr Halamino told The Tribune last Friday that businesses like his, which depend on thousands of tourists, will be significantly affected by VAT.

“It will affect business for any person who has customers, whether small or large,” Mr Halamino said.

“The prices are going to rise up and the Bahamas is already an expensive location because of the high standard of living. With this VAT coming, it’s going to make the place less commercial and less viable for people to come here and for entrepreneurs to do business.”

Mr Halamino said he’d be able to stay open with the same number of people on staff; however, he noted that VAT is coming at a “bad time”.

“It comes in a slow season and it will make things worse. If they are inclined to implement VAT, they should push it back to January through April next year when the most tourists and other clients come into the country. But they (government) want to do it from the mid-year to November or however long. And that period is the worst months for businesses like mine. That will make business even slower.”

He believes the government should seriously consider alternatives to VAT and if it is still inclined to implement the new tax measure, they should not only take the proper steps to ensure its collection but also consider a rate that will not cripple businesses and consumers alike.

The Government is proposing to implement Value-Added Tax (VAT) on July 1 at a rate of 15 per cent, with the hotel industry to be subject to the lower 10 per cent rate. The Government expects to generate an additional $200 million in revenue from the new tax regime.

March 10, 2014