NASSAU, BAHAMAS — Economic Affairs Minister Michael Halkitis yesterday reaffirmed the government’s position that its treatment of Value-Added Tax (VAT) on health insurance will not drive up health care costs, noting that it is not a new tax.
The Bahamas Insurance Association (BIA) has warned in recent weeks that medical bills and treatment costs for thousands of Bahamians will increase due to the Ministry of Finance’s decision to stop insurers from recovering the 10 percent VAT paid on health insurance claims payments from the Government.
During a press briefing at the Office of the Prime Minister yesterday Halkitis explained, “What has happened is the Department of Inland Revenue conducted an audit and discovered that the treatment of VAT by one health insurer was not in accordance with the regulation. For example that insurer was using VAT paid on medical bills as an input to reduce the amount of VAT they paid to the government. We decided that we would ensure that companies apply the rules as intended in the legislation. This rule was supposed to be implemented July 2022. In discussions with the BIA we delayed that. We proposed September 2022, eventually December 2022, then March 2023 and eventually the BIA proposed to us in a letter April 1st 2023 to which we have agreed to,” said Halkitis.
Halkitis said the government does not believe that healthcare costs will rise as a result.
“We do not believe that is the case. We know this is not a new tax. We will be monitoring the implementation to ensure the the rights of Bahamians are protected,” said Halkitis, noting that the government would be well within its right to seek to recoup “millions” in unpaid VAT but has chosen not to do so.
