By NATARIO McKENZIE
Tribune Business Reporter
The government's plans to levy value-added tax (VAT) on vacation rentals will be introduced by legislation after the current budget cycle, the minister of tourism has revealed.
Dionisio D'Aguilar told Tribune Business: "The government is considering legislation on the vacation home rental market to allow for the taxation of that market. In the past it hasn't been taxed. Anyone who is engaged in the rental of vacation homes will be obligated to register and submit VAT to the government.
"Obviously if you book online with Airbnb, they will collect it for the government and submit the tax to the government." Mr D'Aguilar said the government was looking to "level the playing field" between the vacation rental market and traditional hotels/resorts.
"Everywhere in the US charges some sort of sales tax. If you stay at a hotel in New York it's in excess of 20 percent. We think the customer is quite used to paying some sort of tax," he added.
Mr D'Aguilar said the VAT plan for the vacation rental sector remains a "work in progress", and will not come into effect this budget cycle. "It will come in through legislation," he explained. "It's a work in progress. Inland Revenue has determined that it's due and payable. We just have to set up the mechanism in order to register and collect.
"If you put your home on Airbnb they will build VAT into the pricing model, and when the person pays the 12 percent when they book the house or room, that portion - the VAT portion - will be captured by Airbnb to be forwarded to The Bahamas government. If a person is renting a place for $100 per night, then it would be $100 plus the 12 percent VAT."
Mr D'Aguilar said the government does not intend to make the process "overly bureaucratic". "We want to make it easy to deal with. The last thing we want to do is make it too cumbersome," he added.