The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government’s plan to exempt businesses with an annual turnover of $50,000 or less from paying Value Added Tax (VAT) will capture “99 per cent” of the turnover taking place in the Bahamian economy, a senior Ministry of Finance official believes, relieving small businesses from the compliance burden.

Speaking at a recent Bahamas Institute of Chartered Accountants (BICA) conference on VAT, John Rolle, financial secretary in the Ministry of Finance, said: “We have a proposal in the White Paper in terms of registering a business for VAT; $50,000 turnover or higher, you register.

“If you use that benchmark you would capture almost 99 per cent of the turnover that takes place in the economy and eliminate a substantial amount of small businesses from the burden of having to comply with the system.”

Mr Rolle added: “It doesn’t negate the importance for all businesses to keep good accounting records. If you raise the threshold to $100,000 or $150,000, you are not going to see a drastic drop in taxable or final taxable sales that would fall within the VAT net.

“In terms of moving between whether you should set the threshold at $50,000 versus $100,000 or higher, that’s going to become an issue of administratively, is it sensible for the tax administrators to be monitoring all of these activities if only a handful are generating all of the revenues.”

Mr Rolle said there would be fixed intervals when businesses which ultimately exceeded the $50,000 mark would be added to the category of taxable businesses.

The Government is proposing to implement VAT on July 1, 2014, at a rate of 15 per cent, with the hotel industry to be subject to a lower 10 per cent rate. The Government’s White Paper on tax reform proposes to exempt those companies with an annual turnover of $50,000 or less from having to pay VAT.