Categorized | Featured, National News

Value Added Tax Coming


Prime Minister Perry Christie yesterday tabled a “white paper” on tax reform, which is the blueprint on how the government intends to transform the country’s tax system and introduce a value added tax (VAT) next year.

It’s a promise the Christie administration made in its Speech from the Throne – “to review the Bahamian tax system with a view to proposing alternative means of taxation that address the problems of the current system while providing the government with a stable, buoyant and adequate source of revenue to meet its governance obligations to the Bahamian people.”

While presenting the paper in the House of Assembly yesterday, Mr. Christie said the document seeks to do just that.

But, instead of just introducing a new tax, the government will modify current ones.

“Intended with the introduction of this new system it is also proposed to affect the eventual reduction in import duties that will accommodate The Bahamas’ accession to the WTO, to reduce excise tax rates to compensate for the VAT, eliminate the business licence tax as currently structured and to replace the hotel occupancy tax,” he said.

The prime minister said the new proposed tax system will also level the playing field for the poorest and wealthiest Bahamians.

“By predominately focusing in on goods, our tax system is out of balance with international laws. It does not share the tax balance with those who are providing services in a way that is fair or adequate. Moreover, a goods centric taxation system is inherently unfair as it makes the poor, struggling Bahamian pay the same in taxes as the wealthiest does. In short, the current tax system is regressive,” Prime Minister Christie said.

The nation’s chief said tax reform is essential and is becoming more urgent with each passing year to meet the country’s needs.

But he said the government has additional plans to build revenue.

“As was set out in the last budget, important initiatives are also now underway to improve revenue administration, including the Customs Department and the Real Property Tax Office as well as the establishment of a new revenue agency,” Mr. Christie said.

“The government believes that its programme of tax reform – when fully implemented – will result in considerably greater and more efficient revenue collection, the proceeds of which will better equip the government to meet the increasingly complex financial needs of our nation. More fundamentally, it will bring into being a new system of taxation that shares the tax burden more fairly and more equitably.”

The government is now inviting the public to provide feedback on this paper so that it can be guided and assisted in crystallising taxation policies while preparing the relevant legislation for presentation to Parliament.

The value added tax is expected to come into force on July 1, 2014.

Written by Jones Bahamas

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