0

Taxation To Hit Vacation Home Rental Sector

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Legislation is being drawn up to regulate the vacation home rental sector which will include taxing rental income, Tourism Minister Dionisio D'Aguilar revealed yesterday.

Speaking at a press conference for the signing of a Memorandum of Understanding (MOU) between the Ministry of Tourism and Airbnb, Mr D'Aguilar said there is "ample evidence" that the vacation home rental market is one which is poised for growth.

"We see evidence of this in the increase in the number of online booking agents, such as Airbnb and a growing preference among leisure travellers away from traditional hotels toward second home rentals," said MR D'Aguilar.

"The Ministry of Tourism recognises the contribution of vacation home rentals to our economy, but notes, with concern, that, generally, this sector is unregulated and operates without taxation."

Mr D'Aguilar said that while the rate of taxation has not yet been determined the amount of tax levied will level the playing field in the industry. He noted that it could be in the range of the 7.5 per cent VAT.

"Ideally it would have been the 7.5 per cent VAT but that doesn't work for Airbnb. The reason being is there are certain exemptions and they like taxes that are clean and easy to collect. Since VAT has a $100,000 ceiling it becomes difficult for them to ascertain whether that person had reached that threshold," said Mr D'Aguilar.

"The great take away from this is not the tax but that this is a way for Bahamians who are unable to tap into the tourism sector in the formal sense can begin to tap into the sector in the informal sense."

Mr D'Aguilar said the new legislation being crafted to regulate the sector will clarify many of the 'murky issues" which now plague it.

"The regulation will define the parameters of vacation home rentals. It will set the standards and best practices to facilitate the sector in preserving the reputation of our destination brand. The new legislation will put in place a modern regulatory framework within which vacation home rentals can operate as an integral part of our tourism sector," he added.

According to Sean Sullivan, Airbnb's policy lead for Central America and the Caribbean, there are 1,900 active listings from The Bahamas on Airbnb's platform and 1,200 active hosts. "Our average host makes about $6,000 a year through Airbnb. The majority of people who use Airbnb to come to The Bahamas come from the United States, Europe and parts of Latin America. This is an important market for Airbnb. I think that The Bahamas has a lot to offer."

Mr D'Aguilar noted that not all vacation rental properties in The Bahamas are listed on Airbnb's platform which is why over the next few months, the Ministry of Tourism is asking all proprietors and operators of owner occupied rental homes to register with its Hotel Licensing Department. The Ministry launched a registration drive in 2016 and in the past few months saw an increase in the number of registrants according to Mr D'Aguilar.

Comments

Sickened 2 months, 1 week ago

A room tax can be considered BUT I would not suggest taxing rooms that go for less than $150 a night. The reason is, there are no hotels in this price range (in Nassau) that I am aware of. The tourists that stay in these AirBnB rooms tend to eat every meal out (at non-hotel restaurants) and explore much more of the island than tourists that stay in hotels. They take jitneys, rent cars and motorbikes, they go downtown and explore the forts and protected areas.

0

DDK 2 months, 1 week ago

I believe the majority of folks that stay in rental condos and houses eat IN more often that not and patronize local supermarkets (for items they do not bring with them) and liquor stores. I also believe the majority of such on-line rentals at this time are in units belonging to second home-owners who rent out their units and houses to cover their own vacation and investment costs.

0

concernedcitizen 2 months, 1 week ago

DDK that's the case on the family Island I live and they are mostly second home owners . Some of them pay off their investment in 5 to 10 years .The good thing is most of the people that rent the bigger homes are high net worth individuals and spend on car rentals ,boat charters eating out and cocktailing ,and price does not bother them .

0

The_Oracle 2 months, 1 week ago

Does he mean a $100k ceiling, or Threshold? Threshold is to be gone over, ceiling is above, over, out of reach. Two completely different things, no? A minor point perhaps, but important to foster confidence in your capabilities, to get it right!

0

killemwitdakno 2 months, 1 week ago

Tax on an emerging market where Bahamians are the benificiaries doesn't sound like a tourism takeover.

2

killemwitdakno 2 months, 1 week ago

I'm confused on what he means by ceiling.

How does AirBnB work with other places that use VAT?

This is why , as someone who integrates payments online, I warned that VAT was to complicated to implement for websites and was the dumb route.

Now your #1 industry is changing and you can't tax it : D

0

bcitizen 2 months, 1 week ago

This is not good. These under taxed areas was what VAT was for. The people staying in these homes pay VAT on everything electricity, water, food etc. where little to nothing was paid before. Most rental homes do not earn more than 100k to register for VAT to receive credits and who wants to deal with government office B/S to just supplement offset the cost of maintaining/owning a property.

So private rentals will be taxed more than hotels because they cannot receive VAT credits and hotels get duty free and property tax free exemptions under the hotel encouragement act. So it would be like if VAT was implemented and room tax was not abolished.

I am a Bahamian who inherited some property and there are 2 little cottages on it that was used to help give my grandmother a few extra dollars before she passed and now helps to maintain this generation property. I rent them on Airbnb for one. If the government wants airbnb to charge an extra tax when people book and remit it to the government while I find this not right, it would be tolerable.

If these regulations mean I have to register with this government office and that government office and pay this fee and that fee. Have inspections conducted. Deal with all the government people out to lunch, picking up their children, broken down printers, phones that are not answered and the circus that is the Bahamas government then I will just shut the damn rental units down. The couple dollars I make to help upkeep the place would be no where near worth it. So the maid who cleans has less work, taxi driver bringing people here has less work, rental car/boat company less rentals, boat tours less people, restaurants and grocery stores less people buying food, home repair people electricians, plumbers etc. less work. Government less money because no VAT on water, electricity, no departure tax. no VAT on my upkeep expenses, food and everything else. I imagine I am not the only one who feels this way. This is a sure way to shoot yourself in the foot.

1

ThisIsOurs 2 months, 1 week ago

Think its a bad idea, go tax the webshops. I don't understand why they insist on squeezing every penny they can out of the people with the least money but give the rich all kinds of concessions. Round appendages less ness. They won't stop at 7.5% they'll find all kinds of crazy taxes to pile on top of these vacationers soon enough, "breathing air tax", "road usage tax" "just fir the fun of it tax". #justlikedraculaman

2

OldFort2012 2 months, 1 week ago

@bcitizen brings up a very important point. You want to tax AirBnB? Fine. Get them to slam on a 7% tax on all bookings. They collect the money, they pay you the tax. It has NOTHING to do with the guy renting his property. Why should he have to register with some government department? For what? So that he needs to pay a bribe to your officials to keep on working? Things are working perfectly as is: if some accommodation is sub-standard, the client complains, gives a bad review, others stay away. No, now the effing government inspector is going to decide if the room is "suitable"?? We all know what that looks like. Do the UK, Italy, Greece, Spain have a special Law for AirBnB rental?? No. And they collect MILLIONS of time more money than the Bahamas from the sector. And now D'Aguilar, who can't even fill out a customs form, is going to bring the shining light of government regulation to the sector through legislation?? Do PISS OFF, you undereducated megalomaniac. If this government does not get its finger out of its arse, it will end up like the last, PDQ. But the Bahamian people might not be content with just voting you out this time.

1

bcitizen 2 months, 1 week ago

We are well on the way to go further down the pole on the ease of doing business totem.

1

Porcupine 2 months, 1 week ago

The government should learn to live within its means. Not suck up every penny out of the economy that it can, and then wonder why the economy stinks. Try letting something operate without government interference, for once. Perhaps we will see it works well, maybe better. Our government has NEVER improved anything. Except the short term welfare of its own employees.

1

tonymontana 2 months, 1 week ago

Excellent move , for to long second home owners on the island of Eleuthera have been getting away this,

0

bcitizen 2 months, 1 week ago

Yes for many years allot these home rentals were running under the radar and not paying anything and this was wrong. This was one of the reasons hotel room TAX was abolished and VAT was implemented. So they are not getting away anymore since all their expenses have VAT attached which they cannot claim as a credit. Their guests also are paying more when they payed little because, everything they do and buy now in the Bahamas has VAT attached. The couple extra dollars this regulation will garnish will do more harm than good. To now go and basically re implement room tax on private rentals is wrong.

0

becks 2 months, 1 week ago

Getting away with what exactly? Your comment implies they have been doing something wrong or illegal or avoiding something. Lets be clear, the only thing that saved the tourism product on Eleuthera these past 20 years was the vacation home rental market. If it hadn't been for that the economy in Eleuthera would have crashed years ago. Should the second home owners who are renting their homes out in the vacation rental market pay some sort of VAT or a type of room-tax? Definately..they are running a business. But claiming they have been "getting away with something" is out of order, inaccurate and dis-honest.

1

baldbeardedbahamian 2 months, 1 week ago

What a brilliant idea. Lets make this emerging sector of the economy less viable and more expensive for the consumers. Lets hire another department of fiscal parasites, sorry I mean civil servants, to oversee the whole thing and discover who is not complying so we can take them to court and punish them. Lets make sure those home owning foreigners can not easily make any money from renting to people who otherwise would not visit our country, they will just have to find the money to upkeep their homes and pay the real property tax somewhere else. We have stupid and greedy people running this country, running it right into the ground it sometimes seems.

1

happyfly 2 months, 1 week ago

Amazing how the man who talked so much about liberalizing small business in this country is in such a rush to bureaucratize a fledgling industry before it even gets going

The primary problem is the failing hotel industry is lobbying against the 'rental by owner' market. I could write a book on how and why the hotel industry is failing this country but the point is that the government is out of its mind to do anything but nurture this new form of income for the small people

Most other complaints are that some 'some rich foreigner' is making money and not getting taxed. I can tell you for a fact that most of them do not even break even by the time the unfathomable cost of owning and maintaining a house in the islands is added up. Those rich foreigners pay RPT, they pay VAT out the ying yang for anything they touch, they hire local property managers and tradesmen to renovate and maintain their properties, etc. In some islands this translates to 90% of the economy.

You are also a fool if you think signing up a complicated tax deal with Airbandb will fix your small minded taxations There is VRBO, byowner.com, homeaway, etc, etc. Countless booking sites getting added to by the day. You would surely need another entire parasitic government department to keep up with this wonderful new technology that can empower any Bahamian that wants it.

3

BahamasForBahamians 2 months, 1 week ago

No new taxes my foot. Way to protect the big hoteliers and price the small guy out of competition with taxes.

Where are the FNM apologists to defend this poodle?

Add more red tape to tourism why don't ya? After all .. 'we are booming with numbers and doing so well in the caribbean that we can afford to lose visitor numbers due to increased taxes'.

3

The_Oracle 2 months, 1 week ago

Just goes to show, Minnis may want change, transparency, decent governance without fraud, bribery, but he cannot eliminate gross stupidity.

0

DaGoobs 2 months, 1 week ago

This whole issue is instigated by the real estate agents and hotels who are not getting anything out of the people who use AirBNB rentals so they wanted to ensure that not renting from or through them becomes as unattractive and as difficult as possible for the small timers who are trying to make a few dollars through AirBNB. Do landlords pay VAT on the rents that they collect? Like someone said above, more red tape to doing business in the Bahamas, more inconvenience, more time wasting, more restrictions on free enterprise, more opportunities for graft. This amounts to the government attempting to provide a solution where there is no problem. Fits right in with removing/reducing duties on salmon, etc. Makes one wonder where the FNM are getting their advice from - crazy PLP civil servants who have no interest in the government being successful with its agenda or big time monied supporters who have no interest in poor folks and only see this as "their time" to "get what's due to them" now that "their people" are in power. Careful D'Aguilar, not everyone sees these things through your glasses. Remember the old adage, follow the money - then ask, who benefits the most from imposing this new "tax"?

0

becks 2 months ago

This isn't really an AirBnb issue...this whole vacation rental home thing has been brewing for at least 15 years, long before Airbnb existed. The first time I heard about the issue was from a small-hotel owner on a family island back in 2002. AirBnb is being involved now because its low-hanging fruit and AirBnb has experience dealing with this kind of tax-issue from other jurisdictions in Europe and North America. One has to assume that once the government has tthe AirBnb tax in place that they will then go after the VRBO/Homeaway crowd and then the self-promoters who just do direct bookings.

0

Sign in to comment