NASSAU, BAHAMAS – Shadow Minister of Finance Kwasi Thompson has accused the Davis Administration of pushing through what he calls a “hidden 10% tax on Bahamian business investment” while simultaneously shutting small and medium-sized enterprises (SMEs) out of promised economic relief.
The Free National Movement (FNM) is calling for the immediate withdrawal of a key clause in the Value Added Tax (Amendment) (No. 2) Bill, 2025, which it says imposes a de facto tax on business growth by limiting VAT recovery on construction projects.
“This amendment quietly strips VAT-registered businesses of their right to recover VAT on major construction projects over $1 million, unless the project is tied to taxable real estate sales,” Thompson said in a statement. “It’s a massive tax on investment, masked as reform, and the Prime Minister said nothing about it in his Budget Communication.”
The Opposition claims the move will drive up the cost of doing business, stifle expansion plans, raise consumer prices, and ultimately lead to job losses across sectors, impacting everyone from contractors and clinics to manufacturers and private schools.
The new rule means that a VAT-registered company building new offices, manufacturing plants, or clinics costing over $1 million cannot recover the VAT paid on construction, unless the end use is a taxable real estate sale. The FNM warns that this effectively imposes an unrecoverable 10% cost on major investments.
“Why was this kept from the public?” Thompson asked. “This kind of stealth taxation undermines trust and adds serious uncertainty for entrepreneurs and investors. The FNM will not support this secretive tax grab.”
At the same time, the government’s proposed Business Development Incentives Bill, 2025 is coming under fire for what the FNM labels an “elitist policy” that shuts out the vast majority of Bahamian businesses.
According to the draft legislation, only companies with annual turnover exceeding $50 million will qualify for new tax concessions, such as exemptions on customs duties or real property tax. That threshold effectively excludes more than 95% of locally-owned enterprises.
“Let’s be clear: this is a betrayal,” said Thompson. “While the government hands out incentives to big, well-connected enterprises, it offers nothing but more taxes on the small business owners who are fighting to grow, create jobs, and sustain communities across The Bahamas.”
The bill appears aimed at incentivizing large-scale foreign and domestic investments in sectors like logistics, technology, and export-oriented services. But critics argue it offers little support for Family Island entrepreneurs, small manufacturers, or Bahamian service providers who are already struggling under rising costs and limited access to capital.
Thompson said the FNM supports genuine tax reform—but one that is inclusive, transparent, and equitable. He reiterated his party’s commitment to policies that promote Family Island development and reward innovation and productivity across all business sizes.
“This isn’t reform—it’s favoritism,” he said. “We reject this elitist policy and call for a tax regime that puts small businesses first.”
