The Bahamas Get More Expensive

klaxonBahamasOn 17 June last year, we posted a heads up that the Bahamas were on track to introduce a Value Added Tax (VAT) 1 July 2014.

Well, that’s just a few weeks away. [See “Update” Below] Be prepared for everything in the Bahamas to cost up to 15% more (or more) than it does now. For many, it just means cruising there 15% less time, or shortening marina stays or eating out less because they have a fixed budget for visiting the Bahamas. The not so obvious part is if these reactions occur, merchants and service providers will have to increase prices even further to offset the receipts they lose. That 15% has to come from somewhere..

From the Bahamas' VAT SiteTo Government’s credit, they have built an excellent website dealing with the issue. Give it a look. There is nothing in the site that leads one to believe that there will be a VAT for citizens and a different VAT for visitors [along the lines of the GST refund for tourists in Canada], but one complexity for visitors to deal with is: there will be businesses that can collect VAT and those that can’t. The former will add VAT to the price, and the latter will include it in the cost [and passed on in the price]. Good luck sorting it out.

As expected and predicted by many, it appears the VAT is no longer even principally about offsetting reduced Customs revenue (zero-balance). It is about collecting more revenue. The underlying mechanism for this is to add the taxation of services to the taxation of goods. It’s their country; it just pays to know what’s going on before you get there.

Update

3 responses to “The Bahamas Get More Expensive

  1. Gary Weichmann

    We so much appreciate how you educate us. My son and I leave WI in June, sailing east on the Great Lakes , down the AICW, and on to the Caribbean. Like you, I am former military, and we think very similar. Follow us on http://www.svcarpediem.com. Keep the info coming. Hope to see you on the water one of these days.

    Sent from my iPad

    >

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