Airbnb hosts subject to VAT

Airbnb hosts subject to VAT

The Department of Inland Revenue has imposed valued added tax (VAT) on visitors who book rooms online through the home-sharing giant Airbnb, which will mean more revenue for the government, according to Minister of Tourism Dionisio D’Aguilar.

The tourism minister, who spoke with Eyewitness News Online outside the House of Assembly Monday said, the tax agency made the determination after further review of how business is conducted through the booking engine.

“There was some talk about, ‘oh, if I have a business that does this, there’s this $100,000 threshold that I have to get to before I start to pay VAT or I will become liable to that’,” he said.

“Inland Revenue has opined on this and said because you are purchasing a service in the country, instead of importing a product, you are importing a service, it’s still subject to the 7.5 per cent VAT.

“So, we need to go back to Airbnb and all of the vacation rental services and inform them that it is the position of our inland revenue that when you sell this service and you import this service into our country, it is subject to VAT in much the same way as when you import a product.

“You may not be importing a product but you’re importing a service and that is a tax on goods and services.”

D’Aguilar emphasized that the Hotel Licensing Unit will be responsible for licensing registered Airbnb hosts without “overburdening the sector with too much regulations”.

Further, the tourism minister said that the “beautiful thing” about renting your house online is that the market takes care of it.

If it’s an unpleasant experience, he said, “People get online and say it was an unpleasant experience and people won’t rent your house.”

There are currently close to 1,900 local listings on Airbnb’s platform, with the average Airbnb host earning approximately $6,000 per year, according to Airbnb’s data.

Last August, the Ministry of Tourism and owners of Airbnb signed a Memorandum of Agreement (MOA) which focused on the sharing of aggregate Airbnb Bahamas data, provision of information to Airbnb on Bahamian laws and the exploration of Airbnb’s collection and remittance of applicable taxes.