The Abaco Business Outlook 2014 was held at Abaco Beach Resort on Sept. 24 under the theme: “Charting the Course for Growth in Abaco.” Before speakers were called on to deliver their presentations, the Abaco Men’s Choral opened the event with an impressive vocal performance featuring a duet with Gentry Morris and Basil Been that included a remarkable rendition of the National Anthem.
As the keynote speaker, the Hon. Michael Halkitis, Minister of State for Finance, addressed the audience on the topic of “Value Added Tax for a Modern Bahamas.” Minister Halkitis said that the Bahamas Government has embarked on a major structural reform of the Bahamian tax system through the modernization of existing taxes as well as the introduction of a major new source of revenue.
“Tax reform will be an important feature of the business environment over both the near term and going forward beyond,” he shared. “The introduction of a new Value Added Tax (VAT) in The Bahamas indeed represents a landmark moment in the history of our nation.”
The heart of Minister Halkitis’ presentation was summed up under six key points: 1) the Government’s National Development Plan; 2) reform and modernization of major existing taxes; 3) enhancement containment and control of public expenditure; 4) key policy and administrative elements of the VAT Bill; 5) tariff and excise rate reductions; and 6) preparations for VAT implementation.
Once introduced in January 2015 at the rate of 7.5 percent across the board, Minister Halkitis said that VAT will add to enhanced economic efficiency, stronger economic growth and job creation over time and will lead to the gradual elimination of the Government deficit and reduction in the burden of Government debt.
Included under the list of VAT exemptions are financial services (credit and deposit/savings products); the sale or rental of a dwelling; education services including those rendered by a daycare business; the sale of vacant land; any services by a Government ministry, council, department, etc.; health care; religious services by an institution of religious worship; games of chance, gambling and lotteries.
Businesses that make $100,000 or more a year must be registered, and are subject to three filing periods. For businesses whose annual taxable sales exceed $5 million, they will file monthly; businesses exceeding $400,000, quarterly; and all other registrants on a semi-annual basis.
Because of the lowered VAT rate, the Government determined that across-the-board reductions in tariffs and excises were not feasible at this time, however, there will be selective reductions in certain areas particularly building and medical supplies, articles of apparel, clothing and footwear, and various food items. Public service announcements (PSAs) will also be aired frequently as part of their public awareness campaign.
Overall, Minister Halkitis said that the objective is to strengthen the tourism industry, promote additional foreign direct investment across the country, diversify the economy particularly in the agricultural sector as well as the financial services sector, develop and expand The Bahamas’ yachting and shipping registries, expand investments in education and strengthen our national training through the National Training Agency.
Toward the end of his speech, Minister Halkitis acknowledged that the finances of the Government have to be returned to a position of sustainability in order to strengthen the confidence in The Bahamas as an attractive and secure place for investment.