NASSAU, BAHAMAS – Financial Secretary Simon Wilson said yesterday that the Bahamas’ tax system remains one of the most competitive in the Caribbean while emphasizing the need for the country to ensure it receives a fair share of returns from investments, particularly in sectors like real estate, where he believes yields should be higher.
Wilson, who participated in a tax reform panel at the Bahamas Business Outlook held at the Baha Mar resort, stated: “The tax system that we are one of the lowest tax rates in the Caribbean. When we think of reform in the tax system, we are at the stage now in our development where we have to make sure that we are getting a fair share from the investments we have made by deferring taxes historically.”
He continued: “We have provided huge amounts of tax incentives to investors and so forth, and the question we have to ask ourselves is, okay, is the country getting its fair share from these investors? We’ve identified several industries where we believe that the yield should be much higher. Last year, we spoke in the budget communication, and we identified the real estate sector. We believe the yield should be much higher, given the activity in the real estate sector, not by changing rates but by improving compliance because once we have the higher yields, we can now invest in infrastructure and so forth.”
Wilson also noted that the government has introduced tax reforms that will impact the cruise lines’ Bahamian private islands, ending their nine-year VAT-free status. Designed to level the playing field for cruise lines’ private island activities and Bahamian providers who service tourists at other destinations, the reforms involve levying VAT at the standard 10 percent rate on goods and services provided to millions of tourists visiting these locations annually.
He explained: “Last year, we did a major revision in terms of how we look at the income earnings of cruise lines in the country. For years, if you look at how we treated cruise lines, we said any economic activity from the cruise line in their private destination would be treated as if it took place on the cruise ship itself. But if you follow the cruise business, what you realize is the private destinations on the cruise ships are the number one profit driver of the major cruise lines. So, in other words, we were leaving a lot of money on the table from the cruise lines. We made a change last year, and that change is gonna cascade through the fiscal accounts this year and in the future years.”
