NASSAU, BAHAMAS — Economic Affairs Minister Michael Halkitis said yesterday that insurers have asked for a longer transition period as the government moves ahead with VAT-related reforms which would see insured persons pay the VAT on medical claims, and medical expenses while eliminating the practice of health insurers claiming VAT paid on payouts as inputs.
Speaking on the sidelines of a Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Power Breakfast, Halkitis told Eyewitness News, “In all things, there are best practices and standards. I believe that is the way it is done around the world, the recipient of the service is the one who pays. We have been in discussions with insurers, particularly life and health. They have varying opinions. They have said to us that their desire is the ability to have a transition period. We have been having sessions with them. Our objective is to always do things smoothly and cause minimal disruption.” Halkitis noted that the rules which the Davis administration decided to bring into effect at the start of the new fiscal year were drafted back in 2020.
“Certain segments disagree with our position but have committed that if that is our position they need a longer transition period. That is not something we are averse to. I had a meeting with them virtually the week before last and we are planning to have another meeting next week. The idea is to talk through the issue. We don’t want to put anyone at a disadvantage but we also just want to ensure that what we are doing is consistent with international standards,” said Halkitis.
Health insurers have expressed concern that changes that prevent them from obtaining VAT deductions on claims payouts will result in increased insurance premiums and medical costs, although in a previous Eyewitness News interview Financial Secretary Simon Wilson suggested that this would not be the case. Wilson previously affirmed the government’s position that the 10 percent VAT levied on health insurance claims payments to medical providers is a service provided to the end-consumer and should be subsequently considered output VAT, rather than input by the insurance companies.
The health insurance industry has been able to deduct the VAT portion of patient care bills it pays to the Government from the 10 percent levy imposed on client premiums.
