POTENTIAL: Govt could net over $50M from vacation rental market if done right, says boutique resort operator

POTENTIAL: Govt could net over $50M from vacation rental market if done right, says boutique resort operator
Pigeon Cay Beach Club, Cat Island, Bahamas. (PHOTO: PIGEON CAY BEACH CLUB)

NASSAU, BAHAMAS — If done right, the government’s efforts to collect value-added tax (VAT) on vacation home rentals and commissions could net up to $50 million-plus, according to an Out Island boutique resort operator.

Edwin Mulford, owner of Cat Island’s Pigeon Cay Beach Club, has long called for proper regulation and taxation of the sector and yesterday told Eyewitness News: “It may be a lot more as that number only reflects the average Joe’s rental — about $200 per night on these Out Islands.

“If you factor in rental prices of all the upscale stuff, where they are getting thousands of dollars per day, the revenue piles up. I will say if it’s done right, they are looking at $50 million-plus.”

Prime Minister Dr Hubert Minnis, during his budget communication yesterday, noted that his administration has made several statements regarding the “untapped potential” of the vacation homes market and the millions of tax dollars that go uncollected each year.

“We are amending the law to clarify that all vacation home marketplaces, such as AirBnB and VRBO, are required to pay VAT on rentals and commissions,” said Minnis.

Prime Minister Dr Hubert Minnis delivers the 2021/2022 budget communication in the House of Assembly yesteday. (FILE PHOTO)

“Those marketplaces who are charging VAT presently have interpreted the legislation as being only applicable to the commissions paid out. The clarification in the law will make it explicit: VAT will be applicable on the full value of the rental.

“Our plan proposes several amendments and clarifications in respect to tax law and tax policy, that will provide incremental revenue for the government. By amending the requirements from the vacation home rental market as mentioned, we estimate $31 million in increased government revenue.”

Mulford said: “The government cannot allow the private contractors to add this tax and call that good. There are far too many one-on-one guests that book direct.”

He added: “This needs to be well thought out. They refer to rental marketplaces like VRBO and no mention of all the ones they do not know about, let alone the direct bookings with owners. The burden must be placed on the owners of the rental properties, period.”

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