More than 60 members of the Bahamas Financial Services Board (BFSB) packed a meeting room at the Ministry of Finance for an open discussion on the proposed value-added tax (VAT) government is recommending to raise revenue and better manage the national budget.

For senior lawyers, bankers, asset and wealth managers and others, the two-hour face-to-face meeting with Financial Secretary John Rolle was an opportunity to seek answers to highly specific questions. Those questions ranged from waiting to know if VAT would be due on services by companies with a physical presence in The Bahamas, but no local activity to whether rent paid on housing for an ex-pat staff member would be VAT-able.

"In both of those instances, we were able to reassure the financial services industry that VAT would not apply in their cases," said Rolle. "In the first instance, there is no service being conducted or performed in the country so the company would receive full credit on any VAT paid on that part of their operations, while not having to charge their clients VAT for any such services. In the second instance, housing is residential so no matter who pays the rent, it is ultimately VAT-exempt as a residence." While that particular housing will be VAT-exempt, the government has stated its intention to strengthen real property tax assessment and collection as another arm of generation of revenue to handle debt service.

For financial services professionals, there was a clarion call to simplify the language in draft legislation and accompanying guide.

"In our business, they say if a client can understand the way we write in a set of documents, we haven't done our job," said Graham Thompson Senior Partner Dana Wells. "Now, I understand how they feel. We have had people in our office review the draft legislation and go back and forth with the guide and now we ask, 'Can you please write this in a way we can understand what it says?'"

The Financial Secretary said explanatory material was being developed to address those concerns.

"We were really pleased with the turnout and also with the fact that the questions were specific," said Rolle. "I believe that the business community is getting a clearer picture of VAT and understanding why it is a necessary step as the country rebuilds its financial standing. The questions are beginning to be much less about 'Why VAT?' and much more about 'How will this affect me or my business?' or 'How do we do such and such?' Over the next few months, as we roll out more information and begin the registration process, it will become a lot easier to grasp. We are just not accustomed to paying taxes in this country so it is easy to understand the skepticism, but meetings like this go a long way in opening up the lines of communication."

The Ministry of Finance has a full calendar of presentations and meetings scheduled for the next month.

The government intends to bring its mid-year budget to the House of Assembly on February 12, Minister of State for Finance Michael Halkitis told The Nassau Guardian.
Although he could not provide details on the mid-year budget, he said the exercise will have "no requests for borrowing [and] most likely no new legislation".
"It will just be an update on where we are at the halfway point," Halkitis said.
"I think we are basically on target for where we thought we would be.
"We may just present the numbers and not necessarily go into a full debate. We have to decide that. What we're doing is getting numbers; we are in the phase of collecting information. We should soon be finished."
Last May, the Christie administration brought a resolution to the House of Assembly to borrow $465 million to finance the government's projected revenue shortfall for the 2013/2014 fiscal year.
The figure added to the $650 million the government borrowed in the 2012/2013 fiscal period.
Prime Minister Perry Christie has said that some of the borrowing was needed to cover the Ingraham administration's unpaid financial commitments.
During last year's budget presentation it was revealed that government debt as a percentage of GDP was projected at 53.1 percent at the end of the 2012/2013 fiscal year and 56.4 percent at the end of 2013/2014.
The national debt stood just under $5 billion in 2012, or 61 percent of GDP.
During the government's previous mid-year budget presentation in February 2013, Christie pledged to return the country's budget to a surplus.
He affirmed this commitment last December.
"I've set some strong targets of controlling expenditure, meaning costs," Christie said. "I've done it for a purpose.
"I've spoken about regulating all sorts of things in government that I found weren't regulated and being able to put my fingers on these sorts of expenditure, and so we will see. We will see how close we come to the target."
Halkitis has since noted that the government's deficit has been significantly reduced.