The Bahamas Government has announced various changes to its value-added tax regime in its new Budget, focusing on the real estate sector, including for sharing economy platforms.
The Budget announces that temporary accommodation platforms will be required to charge VAT on rentals and commissions. The law will be amended to clarify that VAT will be due not only on commissions but on the full value of the rental.
Further, a 12 percent VAT rate will apply to real estate transactions exceeding BSD2m (USD2m), above the 10 percent rate that applies on the value of transactions above BSD100,000. The Budget, however, includes a number of VAT and other duty waivers and reliefs for property and business investment in islands that have historically lacked investment. Further, property purchases of BSD250,000 or less in Abaco and Grand Bahama will be VAT exempt, or subject to a lower rate of VAT if purchased by a foreign person.
To boost compliance rates, a new provision will be introduced into the VAT law to require a property owner to inform the tax agency when they are shifting the use of their owner-occupied home into a residential or commercial rental property.
The Budget also announces that businesses will be able to apply for a VAT tax credit to cover the salaries of up to 10 new employees hired from July 1. The tax credit will be worth up to BSD400 per week per employee.