The Department of Inland Revenue (DIR), through a hired vendor called Avenu, has begun assessing the owners of short-term vacation rental units with a view to bringing them into compliance with the country's tax code, Guardian Business learned yesterday.
This paper got a hold of a notice sent out by the DIR explaining that it had assessed the property of the person named in the notice and determined that their vacation rental property qualifies to be licensed and is taxable.
At the beginning of March, the DIR launched a registration portal for those who own short-term rental properties to register their businesses, in an effort to ensure high standards of service across vacation rentals and to ensure those owners are meeting their tax obligations.
Those vacation rental owners were given until the end of April to register their properties on the portal on the DIR's website.
The notice sent to the vacation rental owner in question was dated March 30.
Avenu said in the letter that it was hired by the DIR and Ministry of Finance to review taxpayer compliance when it comes to short-term rentals.
"The primary purpose of this evaluation is to identify properties that may be operating without obtaining a business license and/or collection of value-added tax (VAT)," the notice said.
"The value-added tax regulations, 2014 indicates that the rental of any residential dwelling, single family residence, apartment, residential condominium, or other residential real estate for less than 45 consecutive days is a commercial rental establishment and, therefore, VAT is payable on the rentals and must be remitted to the Department of Inland Revenue.
"The Business Licence Act, 2010 also requires business license tax to be paid on the rental of properties that are commercial rental establishments.
"You are receiving this notice because a recent review indicates that you may own or have listed a short-term rental property without registering with the Department of Inland Revenue, Ministry of Finance. If you do not have a business license, are not registered for VAT or have failed to report tax, then you are out of compliance with the short-term rental requirements.
"If you feel you are not subject to business license tax and VAT, we still require a response to remove you from future mailings. Please provide a written statement describing your circumstances. The statement should be emailed to bahamassuport@avenuinsights.com. Upon review, you will be cleared from our system or contacted for additional information."
The notice allows for the owner to become compliant with tax laws even if they have owed taxes for a number of years.
The DIR's Acting Controller Shunda Strachan said last month that they have moved out of a season of ease of doing business and turning out business documents extremely fast to now ensuring that the government's revenue is collected, or that punitive measures are taken against businesses that are non-compliant.
Strachan said while the department reported tax arrears of more than $1 billion a few months ago, that number has dropped to $875 million.
DIR's Head of Communications John Williams told this paper yesterday that Avenu has identified short-term rentals all over The Bahamas and has sent registration letters to those owners. He said a full review is underway.
Avenu bills itself on its website as an organization that can "uncover lost funds or improve mission-critical services" for governments.
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