Govt prepared to work with businesses that may need assistance adjusting
NASSAU, BAHAMAS — Businesses will have up to 90 days after implementation of the 10 percent value-added tax (VAT) rate to make changes on price tags to reflect the decrease, according to Minister of Economic Affairs Michael Halkitis.
The Davis administration has passed a new supplementary bill and amendments to the VAT Act that are expected to take effect on January 1.
Speaking to reporters on Saturday, Halkitis said the government is confident that businesses will be prepared for the change.
There is a transition period for them to be able to change all of those prices and that’s 90 days and that’s handled administratively.
– Economic Affairs Minister Michael Halkitis
He noted that businesses have been put on notice since the government introduced the supplementary budget and VAT bill in October.
“We believe that because businesses have had experiences with VAT and its reduction, it’s a matter of changing the rate from 12 percent to 10 percent,” Halkitis said.
“There are businesses that have physical price tags on items and so there is a transition period for them to be able to change all of those prices and that’s 90 days and that’s handled administratively…
“We believe that they will be ready.”
He added that officials are prepared to work with any and all businesses that may have a challenge implementing the new rate.
The government’s decision to implement 10 percent VAT on previously zero-rated items and services has been met with significant pushback, with some criticizing the decision as causing “more harm than good”.
In 2018, the former administration made several items and services VAT-free, including breadbasket items, prescriptions and some over-the-counter medication. In June of this year, the administration added feminine hygiene products to the zero-rated listing.
The Davis administration has maintained that the reduction will save the Bahamian people money.
According to the supplemental budget, the government expects to yield an additional $92 million in revenue. In the revenue summary, revenue from VAT is expected to increase by $67.5 million, from $926 million in this fiscal period compared to $993.5 million in the next.
