Commercially Scheduled Air Services for VAT Purposes and VAT on Fuel

Posted on: January 4, 2016

January 4th, 2016 (Nassau, Bahamas) – The Ministry of Finance and Department of Inland Revenue wishes to advise the public that effective January 1st, 2016, zero-rated treatment is only to apply to regularly scheduled passenger, freight and courier services. The treatment also extends to the equivalent of C135 operators who can provide evidence to the VAT Comptroller and Customs Departments that they provide, on average, at least once-weekly flights to or from The Bahamas, even if limited to a specified tourist season.

To facilitate this process the Department of Inland Revenue will issue Tax Identification Numbers (TINs) to all commercial operators and provide certificates on a case by case basis to identify which operators will be eligible for zero-rated treatment on services provided by Fixed Bound Operators (FBOs). An expedited process will be put in place to process these applications during January 2016. While this is akin to business licensing, non-Bahamas based foreign carriers will remain exempt from licensing fees and related requirements. This amended approach will remove all responsibility from FBOs to directly obtain the commercial designation for any of their customers.

For audit purposes, FBOs will be required to issue VAT invoices (which must cite the TIN) to recognized scheduled carriers, and maintain a copy of each certificate of eligibility for zerorating on file.

Once carriers have received their “commercial” designations FBOs will be permitted to provide back-dated credit for VAT charged to such customers on or after January 1 2016, and offset any output VAT liability for such in amended return filings.

Finally, with regards to the sale of fuel to aircrafts at the time of departure, the policy is unaltered. Zero-rated supplies are to continue only in respect of those recognized international flights categorized as commercially scheduled.

For more information call the department toll free at (242)-225-7280 or (242)-461-8050 or
email us at taxinquiries@bahamas.gov.bs



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