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Vacation Rental Vat Targeted For Budget

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TOURISM and Aviation Minister Dionisio D’Aguilar.

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

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.”

Comments

ThisIsOurs 1 year, 5 months ago

Wow they certainly know how to kill a young industry.

" 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?"

Wow. Maybe they don't get the reason that people work out of room from their home is because they can't afford to rent office space. They're going suck the economy to a dry husk with their tax em some more strategy

Literally all they've done since taking office is look for ways to take more money from people. What they should be doing is looking for ways to grow tge economy and get people to make more and then the same tax rate will yield greater revenue.

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DDK 1 year, 5 months ago

We are also losing the hotel head tax we used to collect from the untaxed growingly popular home vacation rentals which converts into more VAT on The People! We were already told by this government that airbnb had agreed to collect and remit the tax on the rentals. Obviously that was a bunch of hot air. It is collected and paid by other global destinations.

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DDK 1 year, 5 months ago

This report does NOT sound very hopeful. It sounds like a softening up for another failure to implement collection. We now have one ministry passing the proverbial buck for inaction on to another ministry. With all the money constantly spent by Government on foreign consultants and experts, they should really buck up and get a move on. This loss of room tax problem started with the former government. None of them have a problem taxing Bahamians, they roll that out with no hesitation at all! SMT.

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The_Oracle 1 year, 5 months ago

How are you "importing" a service? Your are rendering a service locally. What if you "rent" to a Bahamian visitor? What have you imported there?

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ohdrap4 1 year, 4 months ago

easy just introduce a room occupancy tax which is waived for vat registrants. make it equal to vat.

they aint importing nothing, they are using a broker overseas to sell their product that is all.

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