President of the Bahamas Real Estate Association (BREA) Carla Sweeting said yesterday she was "concerned" by the government's decision to apply value-added tax (VAT) to condo and homeowners associations (HOAs), which will be mandatory for associations with annual billings exceeding the registration threshold of $100,000.
Speaking with Guardian Business, Sweeting said she was "not surprised" by yesterday's announcement, noting that the issue had been raised during a meeting between BREA and the Ministry of Finance last week.
"We have several questions and concerns that have come out of that meeting that we will be addressing in short order," Sweeting said.
In a press release issued yesterday, the Ministry of Finance defends the decision, arguing that allowing HOAs to issue VAT invoices to VAT registrants who use such properties as vacation rentals offers an advantage to registration.
"Many associations will see little difference between the adjustment in maintenance fees billed and the change in VAT inclusive expenses charged to them by service providers," the statement says.
"In these cases, the collection of VAT from homeowners will match very closely the input credits that associations would be able to claim. There is no upside revenue potential for the government."
However, some members of the real estate community have likened compounding the new HOA fees with other VAT-eligible services for housing communities to double taxation.
As noted, the announcement follows a meeting between BREA and the Ministry of Finance that left members of the real estate community with lingering questions regarding VAT's impact on the real estate sector.
Matt Sweeting, local realtor and chairman of the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) Small and Medium-sized Enterprise Committee, told Guardian Business last week that members of the real estate sector were still "in the dark" following a seminar hosted by the BCCEC and Ministry of Finance earlier this week.
Yesterday's press release clarified that business license fees will not be imposed on homeowner associations. However, residential real estate held as assets for investment or commercial purposes may be subject to business license fees and VAT when used as vacation rentals.
Sweeting said BREA would seek further clarification immediately.
VAT registration for businesses began on October 13. Applications for mandatory registration, which applies to business and HOAs with annual turnover exceeding $100,000, must be filed by November 30, 2014.

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