|Authored by:||Ministry of Finance|
|Source:||Value Added Tax Department|
|Date:||March 16, 2015|
NEWS AND PRESS RELEASE
All Small Businesses Placed on Simplified VAT Returns Scheme
Many can also request to use the Flat Rate Scheme
March 15, 2015 (Nassau, Bahamas) – The VAT Comptroller has now approved all small businesses with $1 million or less in revenues to use the Cash Accounting Scheme.
“These business do not need to take any other steps to use this simplified approach to complete their returns,” said a VAT Department spokesperson. “It will be available when they submit their first return in April.”
Most registrants have reported annual sales of $1 million or less, and will therefore be able to benefit from this process. Effective immediately, they are all placed on the Cash Accounting Scheme. If a business insists, it can go back to using accrual accounting, although it is not expected that this option will be chosen often.
Under cash accounting businesses get to claim VAT credits for actual bills paid or purchases made, and their liability for VAT owed to the government is only based on collections from customers as opposed to bills issued.
The filing process for cash accounting uses two pieces of information. The business must report total sales (including the VAT) based on actual payments collected from customers. They must also report total amounts paid (including VAT) for imports and for purchases from other VAT registrants. The difference between these two values, when multiplied by the VAT fraction of 3/43 will give the net amount owed to the government or the refund that might be due.
A further simplification is that most businesses with revenues under $400,000 per annum can also request to use the Flat Rate Scheme. The amount of VAT due to the government would be just 4.5 percent of collected revenue. In requesting to use this scheme the business must decide whether it would benefit from having less VAT to remit to the government on a regular basis than if it used another accounting method.
However, licensees of the Grand Bahama Port Authority cannot use the Flat Rate Scheme. These businesses do not have to pay VAT on the same range of purchases as registrants elsewhere in the Bahamas and therefore their net returns cannot be reliably estimated this way.
“Now we will be issuing more tailored instructions to help businesses complete these simplified returns,” said the VAT Department spokesperson.
To contact the VAT Department directly, please send an email to firstname.lastname@example.org or call VAT Taxpayer Services at (242) 225-7280.