By NATARIO McKENZIE
Tribune Business Reporter
A Cabinet minister yesterday voiced hope VAT could be imposed on Bahamian vacation rentals in the upcoming 2019-2020 budget despite the multiple complexities involved.
Dionisio D’Aguilar, minister of tourism, spoke out after Airbnb released data showing that its 1,700 “hosts” in The Bahamas welcomed around 59,000 guests in 2018. These persons stayed for an average of five days and, based on a $7,500 median income received by a “typical host”, the sector injected a total $12.75m into the latter’s hands last year.
The government has long planned to collect VAT from the vacation rental sector but, when asked when this would likely come into effect, Mr D’Aguilar said: “It’s out of my silo. It’s kind of in the silos of the Ministry of Finance. They are trying to work out the complexities of taxing this particular industry.
“If you have a room or an apartment on your property because you are conducting a business, does that change the designation of your property from residential to commercial and, if not, how do we ensure that doesn’t happen?
“Then there was to find a way how to tax Airbnb. A lot of people assume that because you’re in the business of renting your home or apartment, and it did not exceed $100,000 annually, they were not subject to VAT.
“Inland revenue has taken the position that you are importing a service, which is similar to a good. When you import goods you pay duty and VAT at the border. When you rent your house or apartment, you are not importing a good but it does attract VAT because you are importing a service.”
Mr D’Aguilar said there were multiple enforcement and collection issues to be “worked through”, and added: “I think what they are going to do is catch it in the Budget. When we change all those laws as it relates to finance, taxation and rates, all that is when I think it would be rolled out but, obviously, I am beholden to the Ministry of Finance.”
In mid-2017, Airbnb signed an agreement with the Bahamian government which requires it to collect all due taxes and fees associated with Bahamas-based vacation rentals listed on its website, and ensure those landlords are in full compliance with local rules and regulations.
Airbnb said 61 percent of its Bahamian hosts are female. It added that its average host in this nation is 50 years-old, with 68 percent between the ages of 30 and 59.
Airbnb has more than 2,900 listings in The Bahamas, while 17,100 Bahamian stayed at Airbnb listings both in The Bahamas and abroad during 2018.
“Undoubtedly, The Bahamas is an important destination in the Caribbean and, thanks to Airbnb and a strong partnership with tourism minister Dionisio D’Aguilar, more and more local travelers, and travelers from the rest of the world, are able to visit The Bahamas and travel in an authentic way,” said “ said Carlos Munoz, Airbnb campaign manager, public policy and communications, for The Caribbean and Central America.
“This sustainable way of traveling generates a positive and significant impact within the country, and helps to economically empower our Bahamian hosts and their communities. Airbnb contributes to the development of the Bahamian tourism sector, which shows great potential for growth in 2019.”