By NEIL HARTNELL
Tribune Business Editor
Bahamians have been alerted that LinkedIn, the professional networking app, has become the latest digital economy app to impose 10 percent VAT with effect from July 21, 2022.
The move has caused consternation among several local LinkedIn users, with one telling Tribune Business yesterday he will not be renewing his annual subscription given that it appears this payment, too, has now become VAT-able.
Franklyn Robinson, chief executive of Aqua Development Company (Bahamas), questioned how VAT could be levied when he was not purchasing goods or services from or via LinkedIn, adding that the app was about social and career networking rather than transacting commerce.
Asserting that this amounted to government overreach, and was akin to monitoring and interference in private citizens’ lawful activities, he told this newspaper: “What you’re doing online as a private person, private citizen, how does that become a concern of the Bahamas government for them to taxing it?
“I don’t understand that and don’t agree with that. I don’t remember seeing anything published in relation to that. It’s a social gathering. You’re reading articles from people saying what they’re doing in their career and business. It creates a network where you’re exchanging information. There’s no benefit other than socialising. For the Government to tax you for socialising.....
LinkedIn’s message said 10 percent VAT will be imposed on “subscriptions and other paid service purchases” that it offers. Mr Robinson said: “They sent that out to me because my renewal is next month. That means I will not be renewing. It doesn’t make any sense to me. That’s probably about $39 that I will have to pay 10 percent VAT on for my renewal.
“I don’t agree with that. There’s no transaction, no business being transacted. It’s not like you’re purchasing something coming to you. I don’t understand that. It’s social interaction. It’s not a business transaction. I’m going to expect an e-mail to say your government wants us to disclose your private information, and pay tax on it. I don’t support that.”
LinkedIn’s e-mailed warning, which has been seen by Tribune Business, said: “We want to provide you with an important tax update related to Bahamas tax that will impact your LinkedIn purchase(s). This affects subscriptions and other paid service purchases from LinkedIn.
“The Bahamas has introduced tax at 10 percent on e-Services. To comply with these laws and regulations, this tax will be added to your current LinkedIn purchase starting on July 21, 2022.” Individuals, as the end-consumer, will automatically be charged 10 percent VAT on all their purchases via the app.
“LinkedIn will charge and collect tax on all invoices. Bahamas tax will apply to all customers regardless of the customer’s tax structure,” the app, which is owned by Microsoft, added. Businesses were told to add their VAT Taxpayer Identification Number (TIN) to their LinkedIn profile “at your earliest convenience”, although they will be able to offset or ‘net off’ any tax payments as a business expense and thus deduct it from their ‘output’ VAT.
Neither Senator Michael Halkitis, minister of economic affairs, nor Simon Wilson, the Ministry of Finance’s financial secretary, responded to Tribune Business calls and messages seeking comment on the Government’s position before press time last night.
However, it appears that LinkedIn has become the latest digital economy player to agree to levy, collect and remit VAT to the Government from transactions involving Bahamian citizens and businesses. The move seemingly continues a trend begun under the former Minnis administration where taxation agreements were reached with social media and ‘big tech’ giants.
The Government has been seeking to get ahead of any challenges posed by the digital economy, and ensure due taxes are collected on all goods and services consumed in The Bahamas. While goods and services may be purchased online, or via social media, from entities outside The Bahamas, its approach has been that these are ‘taxable supplies’ and VAT becomes due if they are consumed locally by the end user.
This is also seen as levelling the taxation playing field between the digital and physical economies. The Government has already struck VAT taxation deals with the video streaming service, Netflix, and Facebook over the placing of advertisements via the social media site.
While LinkedIn allows employers to post job advertisements, and job seekers to do likewise with their CVs, it is primarily a platform for career networking and professionals. Mr Robinson said its entire ethos was completely different from that of Facebook, agreeing that VAT should be charged on advertisements placed by Bahamians with the latter.
“I know Facebook has an ad element where you can advertise services via Facebook, using it instead of a local ad agency,” he added. “You’re soliciting business in The Bahamas, transacting business in The Bahamas for services in The Bahamas, so that it taxable.”
The Government has argued that Facebook’s VAT arrangement with The Bahamas was similar to taxation-related agreements it had reached with other countries. It views this as not dissimilar to the partnership between the Government, via the Ministry of Tourism, and Airbnb where the latter has agreed to levy, collect and remit VAT on all Bahamian vacation rental properties marketed via its website.