As the February 28 deadline approaches for the first value-added tax (VAT) filings, businesses are considering the new rules issued by the VAT comptroller as guidance and clarification for particular sectors of the Bahamian economy. Large businesses - that is taxpayers making $5 million or more in gross sales - are expected to file their VAT returns by February 28. The Ministry of Finance has made it clear that the payment must be received by the due date. Registrants can pay online, or at their banks, but walk-in or mail-in payments at the VAT Department are not accepted. Businesses that file quarterly have until April 28, 2015 to complete returns and payments.
Among the new rules issued by the VAT comptroller is a rule intended to establish the variables to be used by Financial Institutions (Clearing Banks) to claim input tax incurred in their operations. The rule is retroactive to January 1. The rule is that, where the inputs incurred can be directly identified or allocated to a zero rated (offshore activity) or standard rated activity, full input VAT credit will be allowed, but where the inputs can be directly allocated to the exempt activity, no input credit will be allowed. Other inputs which cannot be directly allocated to a supply will be apportioned based on the following formula:
a) Input credits for zero rated supplies will be approved in direct portion to the share of annual labour or man hours allocated to zero-rated supplies as a percentage of total labour hours directed to all categories of supplies (zero, exempt and standard); and
b) Input credits for standard rated supplies will be approved in direct proportion to fee income as a fraction of fee plus net-interest income from domestic supplies.
For the purposes of this Rule, annual man hour allocations will be based on the number of employees engaged in making a taxable supply based on 40 hours per week over 52 calendar weeks, the VAT Department noted.
The Department also issued a rule aimed at providing additional rules for the display of the menu pricing for dine-in restaurants and hotel restaurants: for the purposes of this rule, dine-in hotels and restaurants are considered establishments where the customer consumes the service onsite and the customer receives tableside or in-room delivery of such service. This rule does not cover VAT registrants that provide meals for delivery or consumption off the premises or registrants that do not provide table-side delivery of the service, the Department stressed.
Dine-in and hotel restaurants are allowed to display VAT exclusive prices on menu boards and menu sheets. Where prices are displayed exclusive of VAT the registrant supplier must always also reveal in the same display notation which state the rate of VAT that will be added to the price of the service, the Department explained, adding that for each menu notation that discloses the rate or amount of service gratuity, a disclosure of the VAT rate must also be made in the same size font, and no less than in an immediately preceding or following sentence.
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