The government has significantly stiffened financial penalties associated with non-compliance with value-added tax (VAT), increasing the fine associated with contraventions of the law ranging from the most minor to the most serious by between 100 and 200 percent.
The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) has welcomed the move, urging the government to do the same for other taxes while beefing up enforcement.
Under the new Bill, a minor contravention will now come with a $25,000 penalty. Under the previous draft version of the VAT Bill, released last November, such an incidence of non-compliance would have led to the offender being hit with a $12,500 fine.
A "serious" contravention, previously subject to a $25,000 fine, will now come with a $75,000 fine. Meanwhile the "most serious" incidences of non-compliance could see offenders hit with a $150,000 fine, up from $50,000 under the draft version of the VAT Bill released in November last year.
The government tabled the VAT Bill 2014 and accompanying regulations in parliament on Wednesday, following an announcement earlier this year that it would postpone introducing the tax until January 2015.
The Bill requires all businesses with annual turnover of over $100,000 to register to pay VAT to the government. The government has highlighted the need to overhaul the present tax system in order to capture a larger part of the economy in the country's tax base than currently occurs within the duty-based tax system, and to place the country's fiscal future on a firmer footing.
Robert Myers, chairman of the BCCEC said of the increased fines: "I think it's good as long as they think they can enforce it. The stiffer the penalties, the less people will want to try to cheat. However, we don't support it being a jailable offense."
Myers said he would like to see the government impose similarly harsh penalties for other taxes, such as real property tax, which need to have their compliance rates increased if fiscal reform is to be successful.
"If they can write these kind of laws with regards to VAT, surely they can clean up and write laws with respect to all the others. Tax collection is a major issue. For people not paying they need to lose their property, lose their house. I don't want to pay anyone else's tax but every time someone doesn't I pay more."
However, Myers expressed concern that the inclusion of provisions allowing for heavier penalties is not helpful if the law is not fully enforced.
"If you are not going to enforce the rule of law it doesn't matter what the fine is, and the problem we have now is that they don't enforce for their favorites. Some they shut the power off...some they don't. There is no equitable enforcement of the rule of law and that's a big freaking problem because people say 'Why the hell should I
pay if they aren't?'"
The Bill continues to include many of the provisions associated with trying to avert VAT non-compliance and to punish such non-compliance should it exist.
These include: giving VAT officers direct powers of entry and seizure; authorizing the VAT Comptroller to ensure the recovery of unpaid tax from people leaving The Bahamas; giving the VAT department the right to obtain a lien on the assets of delinquent tax payers; the ability to require an agent of a person liable to pay tax to pay that tax on their behalf; and the ability of the Comptroller to "declare certain persons as a representative of a taxable person thereby making them liable to perform the duties of the taxable person", among other provisions.
The Bill also provides for the publication of a list of names of those who have not paid their VAT.
However, the new Bill notably removes any reference to the creation of a Revenue Court, as was previously envisaged, to handle tax related offenses

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