The legislation and regulations the government drafted to guide its value-added tax (VAT) regime when it takes effect next July would tax over 80 different professions, cable bills and phone bills for all consumers, and electricity and water bills for businesses.
The Value Added Tax Bill 2013, and the Value Added Tax Regulations 2013, obtained by The Nassau Guardian, propose a flat tax rate of 15 percent on a long list of professional services, utilities and imported goods.
Financial services carried out for a specific fee, many financial transactions and insurance transactions and premiums, except for health and life insurance, will also be subject to VAT.
As has been widely reported, hotel rooms and food and beverage transactions would be taxed at a rate of 10 percent.
Condominiums that are part of a hotel complex, even if they're part of a rental pool, would be taxed as well.
However, some services and goods will be exempt from the new tax.
A variety of breadbasket items, educational institutions, daycare, after school, retirement, medical, and disabled facilities, religious institutions, charitable organizations and the sale or rental of a dwelling not part of a hotel complex would be exempt.
Games of chance, gambling and lotteries would also be exempt.
While the government has drafted over 160 pages of legislation and regulations, there are still a few things that have yet to be set in stone.
For example, the regulations propose a threshold for VAT being applied to electricity and water bills for commercial consumers.
This means that if a business consumes less than a certain amount of electricity per month to be determined by the government, it would pay no VAT; everything exceeding that as yet undetermined level would be subject to VAT.
The same is being proposed for businesses that consume public water.
While the draft legislation does not propose to impose VAT on these services for residential consumers, The Guardian understands that the prime minister will soon decide whether this will change, bearing in mind his party's pledge to lower the cost of electricity.
The government has also not decided on what the threshold will be for professional services to become VAT registrants.
The Guardian understands that currently the government is considering $100,000 or $150,000 as the threshold at which VAT will apply to those services.
The legislation also exempts professional services that are conducted for people who are not in The Bahamas in many instances.
Domestic transportation by land or water, other than in connection with a tour, would also be exempt.
VAT registrants who will be required to impose the new tax on retail transactions will be those businesses whose revenue exceeds $100,000 per year.
The VAT legislation and regulations are quite detailed and complex, but there are many areas that are quite straightforward.
What will you pay more for?
Expect financial transactions to impact your bottom line.
Financial services and transactions are not exempt from VAT if they levy a fee.
This includes, short-term insurance contracts; legal, accounting, record packaging services, and tax agency services, including advisory services; the provision of insurance, other than life or medical insurance; safe custody for money or documents; brokerage services; debt collection or factoring services and trustee services.
Also taxable would be the transmission of money or monetary value in any form; the issuance, sale or redemption of money orders or traveler's checks; check cashing; currency exchange issuance, sale or redemption of money orders and traveler's checks and currency exchange and pay day advances.
Loans to consolidate finances from bank to bank will be subject to VAT if the repayment terms are in installments.
However, financial services provided to a person treated as a non-resident for purposes of the Exchange Control Regulations are exempt.
Accounting and record packaging services rendered to these institutions would also be exempt.
What won't cost more
Many basic food items will be exempt from VAT.
Beef, chicken, pork, sheep meat, horse meat, smoked meat, dried meat, salted meat, sausage, sandwich meat, corned beef and fish will be exempt.
Fresh milk, milk products, concentrated and evaporated milk, cream, cheese, dairy spreads and butter will also be exempt.
VAT will not apply to fresh and frozen vegetables and fruit.
Rice, fonio, quinoa, triticale, flour, cereal, cereal grains, cereal groats (like oat, wheat, barley and rye), meal and pellets will be exempt.
Soybean oil, ground nut oil, olive oil, sesame oil, castor oil, other oils used for cooking and vegetable fats will also be exempt.
Margarine, imitation lard and shortening will be exempt.
Cane sugar, beet sugar and white sugar will be exempt.
VAT will not apply to bread, noodles, couscous, bulger wheat or foods for infant use.
Mustard and mayonnaise, soups and broth will also be exempt.
Mineral water for infant use will have no VAT applied to it.
Laundry detergent, dishwashing liquid, soaps and domestic utility goods will also be exempt.
Licenses issued by the government will be exempt from VAT as well.
Government agencies, ministries, departments, statutory bodies, local government councils, or other government entities that provide services that are usually taxable will be exempt from VAT if the services are of a nominal amount or they are not intended to recover the cost of those goods and services.
The Ministry of Finance will begin a series of intensive VAT workshops for the public starting tomorrow, Financial Secretary John Rolle said recently.
The workshops will come amid criticism over the proposed implementation date and questions about its impact.
The government has said VAT is necessary to bring down the government's massive deficit and get the country's spiraling debt situation under control.
Ministry of Finance officials estimate that VAT can generate about $200 million in annual revenue.Professions subject to VAT under draft bill1. Accountants
2. Actuaries
3. Acupuncturists
4. Advisors
5. Advocates
6. Aestheticians
7. Appraisers
8. Architects
9. Athletes
10. Athletic Trainers
11. Auctioneers
12. Audiologist
13. Barbers
14. Beauticians
15.Chemists
16. Chiropractors
17. Consultants
18. Contractors
19. Cosmetologists
20. Counsellors
21. Custodial engineers
22. Custom brokers
23. Dental Assistants
24. Dental Hygienists
25. Dentist
26. Dieticians
27. Electricians
28. Electrologist
29. Embalmers
30. Engineers
31. Entertainers
32. Financial Analysts
33. Foresters
34. Funeral Practitioners
35. Geologists
36. Hair Dressers
37. Hairdressers
38. Health Care Providers
39. Home Repair Service Providers
40. Interior Designers
41. Interpreters
42. Land Sales Developer
43. Landscape Architecture
44. Lawyers
45. Librarians
46. Massage therapists
47. Mechanics
48. Naturopathic Doctors
49. Nurse Practitioners
50. Nurses
51. Nursing Home Administrators
52. Occupational therapists
53. Occupational therapy Assistants
54. Optometrists
55. Orthodontist
56. Osteopath
57. Painters
58. Pharmacists
59. Physical Therapists
60. Physicians
61. Physicians (MD)
62. Pilots
63. Plumbers
64. Podiatrist
65. Professional fundraisers
66. Professional Planner
67. Professors
68. Promoters
69. Psychologists
70. Radiologic technicians
71. Real Estate Appraisers
72. Real Estate Professionals
73. Respiratory Care Practitioners
74. Salesmen
75. Scientists
76. Social Workers
77. Speech-Language Pathologists
78. Stock Brokers
79. Surveyors
80. Teachers
81. Technicians
82. Timeshare Developers
83. Timeshare Sales Agent
84. Transient Sellers
85. Translators
86. Veterinarians
87. Such other professions that the minister may add
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