Thursday, February 14, 2013

White Paper On Tax Reform To Secure Adequate Revenues For The Future

Authored by: Rt. Hon. Perry G. Christie
Source: Ministry of Finance
Date: February 14, 2013

A Value Added Tax Within A Reformed Tax System

In the 2012/13 Budget Communication, the Government announced that it would address the issue of tax reform as a means of broadening the tax base to include both goods and services.  To that end, a White Paper would be prepared and issued to serve as the basis for extensive public discussions and consultations.

The overarching objectives of the tax reform proposals in this White Paper are threefold, namely:
  1. to secure an adequate revenue base in support of modern governance;
  2. to establish a tax structure that promotes economic efficiency and stronger economic growth; and
  3. to make the tax system more equitable.
As a means of achieving these objectives, it is proposed that a Value Added Tax (VAT) be introduced as of July 1, 2014 as part of a fundamental reform of the tax system.  In tandem, we also propose to:
  • effect the eventual reductions in import duty rates that will accompany The Bahamas’ accession to the World Trade Organization (WTO);
  • reduce excise tax rates to compensate for the VAT;
  • eliminate Business Licence Tax as currently structured; and
  • eliminate the Hotel Occupancy Tax.

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