Ministry of Finance Updates general VAT Guide and issues Guidance on Transitional Arrangements
|Authored by:||Ministry of Finance|
|Source:||Ministry of Finance|
|Date:||September 6, 2014|
|The Bahamas VAT Guide|
|The Bahamas VAT Guidance – Transitional Arrangements|
On September 6, the Ministry of Finance issued the VAT Guidance on Transitional Arrangements and a slightly updated version of the general Bahamas VAT Guide.
The transitional arrangements provide information on a number of areas including how the law accommodates commercial contracts which span both 2014 and 2015.
In particular, multi-period contracts that are already in force and continue into 2015 will not have to be rewritten, even though suppliers will still have to account for VAT on such revenues. Examples of these are construction, commercial leases and commercial rental agreements. VAT will have to be assessed on the portion of goods or services delivered after December 31 2014. If the contracts do not already make provision for VAT the law will permit suppliers to issue supplemental bills to recover the VAT.
The transitional arrangements also describe provisions that have been made to handle 2015 hotel vacation packages that have were secured by full or partial payment prior to September 1st 2014, and to allow business to take advantage of inventory cost savings on items for which import duty rates will be reduced on January 1 2015.
The updated general guide now makes reference to the assessment rate of 4.5 percent that will used by small business that file half yearly returns under the Flat Rate Scheme. These businesses with sales under $400,000 would pay 4.5 percent of their cash sales to settle their VAT liability. They would still have to charge customers VAT at the rate of 7.5%, but be allowed to retain the difference to compensate for input tax credits.