Value Added Tax Act – An Overview

The Value Added Tax Act, 2014 ("VAT Act") came into force 01 January 2015. It is intended to raise additional revenue for the Government of The Bahamas by means of value added tax ("VAT"). Prior to the VAT Act, the Bahamian tax system relied principally on border taxes, namely, customs and excise duties.

VAT is a form of consumption tax. It differs from the sales tax. A sales tax occurs once, that is the sales tax is collected at the point of purchase by the end consumer and then remitted to the government. However, VAT occurs multiple times in the supply chain at each point of purchase of the product/service resulting in multiple collections and remittances to the government with tax credits accruing to suppliers in respect of taxes paid earlier in the supply chain.