Government officials within the Ministry of Finance have claimed that charitable organizations will be "largely shielded" against value-added tax (VAT), amid concerns from local charities that the tax would cause them to "suffer tremendously".
In a statement released on the government's VAT Bahamas website, Financial Secretary John Rolle sought to clarify the VAT status of charities in response to a Guardian Business article published last week, arguing that charities would be eligible for approved VAT refunds.
"It has to be emphasized that charities, such as The Humane Society, should be largely shielded in how they are impacted by VAT. The services that they deliver will be VAT-exempt under the provisions of the legislation, and eligible charities will be able to claim a refund of VAT paid on the acquisition of certain goods and services.
"Eligible charities will need to meet the criteria for eligibility set out in the VAT regulations. As charities are not uniform in their service and financial profiles, the guidelines and VAT rules about to be issued by the VAT Department will provide more clarification on how their operations will be treated," said Rolle.
The regulations within last month's tabled VAT legislation stipulate that charitable organizations will be able to apply for a refund for any "VAT paid on the acquisition of qualifying goods or services".
However, other entities have already expressed serious concerns over the speed with which businesses and organizations will be able to receive their VAT refunds from the government, specifically stated that it would try to streamline the VAT refund process during the tabling of the most recent legislation.
In the earlier Guardian Business article to which Rolle responded, Bahamas Humane Society (BHS) President Kim Aranha claimed that charities would "suffer tremendously" under VAT and that the implementation of the tax would be a logistical "disaster" for the country.
"The Humane Society will suffer tremendously...(VAT) is going to be a disaster for The Bahamas. I don't think we have the bookkeeping or the accounting expertise. We're just putting in another layer that will be abused, that people will find around," stated Aranha.
Rolle confirmed on Monday that the government had prepared several industry-specific VAT guidelines, and would release them by the end of the week.
"More than a dozen of these guidelines are already in draft form and we are receiving preliminary feedback on them before they are more widely publicized," stated Rolle.
Marvin Clarke, project manager for VAT implementation, stated that the upcoming guidelines were flexible and would change as further clarification was required.
"The VAT guides are living documents that will expand as the need for additional clarification is expressed by the public," said Clarke.
The VAT Bill passed in the lower House last Wednesday. The government plans to implement a VAT at a rate of 7.5 percent, effective January 1, 2015.

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