From:TheBahamasWeekly.com
VAT: Important Updates for Financial Services, Real Estate and Tourism
Nov 16, 2014 - 11:52:05 PM
VAT
Department Preparing Revised Guides: Important Updates for Financial Services,
Real Estate and Tourism
The Ministry of Finance and the VAT Department
continue to incorporate private sector feedback into revision of the VAT
guidance notes. The notes foreshadow the
administrative framework for the VAT.
“We want to ensure that the private sector receives ongoing clarity
about the VAT framework. The next version of the sector specific guidance notes
and the general VAT Guide will do this,” a spokesperson for the Ministry
said. “In addition we will introduce the
first set of detailed guidance on pricing, accounting and record keeping.” Amended VAT regulations are now ready for
promulgation, once final sign off is received from the Cabinet.
International
financial and professional services unequivocally zero-rated.
Guidance notes updates for the financial
sector will reinforce the zero-rated treatment of products and professional
services supplied in the international sector. VAT will not be charged on the
end range of these products and services provided, to non-resident clientele.
The VAT Department acknowledges that
non-residents are considered to be persons and corporate vehicles that are
located wholly outside the Bahamas, as well as companies and individuals
(foreign property owners) who have physical operations in the Bahamas but are
recognized as non-residents under the Exchange Control Regulations. The second category includes most Bahamas
licensed banks and trust companies, external insurers and mutual fund
administrators, along with a vast range of products and vehicles, including
trusts, IBCs, and investment funds.
While Bahamian registered companies and vehicles number in the tens of
thousands, only a very limited few who maintain their own locally staffed
operations, are required to register for VAT.
“We will continue to provide the clarity
that is needed to ensure there is complete understanding that VAT is not
supposed to be passed along in the prices for products and professional
services that are considered exports in the context of the offshore or
international sector.”
Income
producing homes and condos may qualify as commercial investments
For local real estate services, the VAT
Department explained that even when these are supplied to non-residents, VAT
would always apply as the benefit of the
services are considered to be received in the Bahamas. However some non-residents have permission to
hold real estate as income producing investments. Under the VAT legislation
these holdings will qualify as
commercial properties. These properties
would always be required to register and charge VAT, if annual earnings exceed
the $100,000 threshold. Once they meet
and satisfy the registration requirements they will also qualify like other
commercial properties to claim input credits.
Another clarification for real estate is
that transfers of commercial property will only be subject to VAT on legal fees and commission and not the
stamped conveyances. This will remain
the practice until stamp tax on conveyances is reduced or eliminated.
Hotels can
begin including VAT in 2015 reservation bookings
The Ministry of Finance and the VAT
Department have worked diligently to address queries by hotel operators on how
to transition from the hotel occupancy tax to VAT. As of January 2015 all stays in hotels, and
holiday rental properties will be subject to VAT instead of the room tax.
“We have worked with BHTA to grandfather
hotel packages secured before September to remain subject to the occupancy tax that was paid with the
reservation. As properties complete
their VAT registration they are also permitted to advertise and book the VAT
for 2015 stays.” This is a practice that
the VAT Department is immediately allowing VAT registrants to adopt, so as to
minimize VAT-related adjustments when guests check out from properties in
2015. In the meantime, the Ministry of
Finance is working closely with the hotel sector to notify online and foreign
travel agencies of the pending VAT.
More
details are on the VAT website
The public is invited to visit the
Government’s website at www.bahamas.gov.bs/VAT for a more detailed
report on the changes being made to the VAT guides.
© Copyright 2014 by thebahamasweekly.com -