BHTA President Urges Businesses to Plan Now for VAT Implementation
BHTA, along with the Chamber of Commerce, has reached out to the Ministry of Finance to collaborate on the public-private sector implementation and transition to VAT. The Prime Minister, in the Government’s recent budget communication announced his intention to establish a private sector task force to guide the training and education aspects of readiness. Given the predominance of tourism in the economy, BHTA has expressed a desire to be represented on that task force.
Key Readiness Activities Identified
In a recent letter to Minister of State for the Ministry of Finance Michael Halkitis, BHTA advised that the elements for a public-private sector training initiative should include:
· VAT fundamentals – How it Works
· A Review of All Relevant Aspects of the Legislation, Regulations, and Guide Notes
· The Government’s Reporting and Filing Requirements and Processes
· Options for Business Software and Point of Sales Systems
· Updating Business Communication Pieces, inclusive of contracts, websites, billings, receipts, menus, etc.
· An Understanding of Transition Issues – Inventory Management; pre-booked and contracted business
· Training – Managers, Accounts Personnel, front-line personnel
BHTA advises that the above mentioned ‘elements’ should be detailed, focused in their scope, and consider outreach to the Family Islands and Grand Bahama. According to Bowe, businesses should focus on what they can do now, until the details of customs duty schedules and regulations are released.
Members Can Now Access VAT Resource Page
To assist its members with readiness, BHTA has established a VAT Readiness page on its website which can be accessed by going to http://bhahotels.com/vat. The site will be fluid, with new items and links added as resources become known and available. Businesses can also access the Ministry of Finances VAT website by going to www.bahamas.gov.bs/wps/portal/public and selecting the Value Added Tax tab on the left.
Since October, 2012, BHTA has provided members with a steady flow of information about VAT. BHTA’s online Member Resources VAT page provides basic information on how VAT works with documents developed by the Ministry of Finance and BHTA allied member KPMG. The site also includes studies and other information on VAT and its potential impact as developed by BHTA, the Chamber’s Coalition for Responsible Taxation, Ernst & Young, Oxford Economics, PriceWaterhouseCoopers, and KPMG.
What Businesses Can Do Now
Presently, members should be reviewing their accounting and record keeping systems to ensure they will be able to track and record daily operational transactions. This is particularly important for small businesses which may not currently be tracking and capturing all this information. If the systems are not in place, a business stands to pay far more in VAT than they should, or not be able to fully claim input credits. This is effectively a form of double taxation.
In addition, businesses should identify any organizational literature pieces that require language changes or indicate whether VAT is included or not. For example, the Government has communicated that some types of transactions, possibly F&B, may be posted inclusive of VAT. This type of example will be finalized when the regulations are released.
Businesses which computerize sales transactions will need to modify point of sales systems. This may be a simple software adjustment or may entail extensive changes for larger businesses.
Initial Readiness Meeting Held with Ministry of Finance
Recently, BHTA convened a small representative group of tourism-related businesses to meet with Ministry of Finance officials to discuss the technological aspects of VAT readiness and implementation.
It is the intention of the Government to allow for online registration and filings. The required frequency of filings will depend upon a business’s annual turnover. The frequencies communicated to date are:
(a) businesses with a turnover in excess of $5 million to file monthly
(b) businesses above $400,000 and under $5 million would be required to file quarterly
(c) businesses under $400,000 file biannually.
(d) Any business under $5 million could opt to file more frequently should they wish.
BHTA continues to conduct research and provide the Government with information that highlights the importance of timing and preparation needs to comply with a January 1st, 2105 VAT implementation date. The BHTA has presented the Government with a list of VAT-related issues and recommendations that require urgent attention and resolution.
According to President Bowe, “We have expressed appreciation to the Prime Minister for delaying VAT’s implementation and reducing the proposed VAT rate from 15% to 7.5%, including the change of the present 10% room tax to a 7.5% VAT. Likewise, we have identified a number of serious concerns that impact the tourism industry based on the proposed VAT, which need resolution to prevent a significant decline in the industry’s price competitiveness.”
Bahamas Hotel & Tourism Association (BHTA)
