Tuesday, March 25, 2014

The value added tax (VAT) rate and the taxation of web shops

Ryan Pinder: VAT rate will depend on web shop taxes

Guardian Staff Reporter

The value-added tax (VAT) rate will depend in part on the amount of money the government is able to derive from the taxation of web shops, Minister of Financial Services Ryan Pinder said yesterday.

"One of the reasons that the prime minister could say that we’re not going to come in at a 15 percent rate is because there is now discussion about the regularization and taxation of domestic gaming and that industry,” Pinder told The Guardian.

“Well what that does is that broadens that tax base, and when you broaden the tax base, tax rates come down and can be lower with less impact on Bahamian people and that's ultimately what we're trying to do.

“…When you see other industries that aren’t taxed that you can bring into the tax rate, the rate goes down.”

Tourism Minister Obie Wilchcombe announced earlier this month that Cabinet will review a proposal to regulate web shops by the end of this month.

Wilchcombe is pushing to regulate web shops by July 1.

The government is expected to tax web shops and winnings.

The taxation of web shops and the introduction of VAT are components of the government’s plan to improve the country’s finances.

Christie said recently the government will introduce VAT at a rate lower than the 15 percent previously announced.

Pinder said the government is still working to determine the introductory rate.

The government’s considerations will be influenced by the Coalition for Responsible Taxation, which is conducting a study on VAT and other tax alternatives.

While the coalition said it will present an alternative that the government could effectively implement by July 1, Pinder said the coalition’s report, “could effect the timing of the implementation”.

The government’s target date is July 1.

But Christie has hinted there might be a delay.

Christie also said he can still be persuaded by the private sector to introduce an alternative tax if it proves to be viable.

Chairman of the Chamber of Commerce and Employers Confederation Chester Cooper said yesterday that while it is still unclear what direction the tax conversation will go, the chamber is helping businesses prepare for the introduction of VAT.

The chamber established the Coalition for Responsible Taxation.

“Our view is the government says it’s going to be VAT and therefore our members must be prepared for VAT,” he said.

Cooper said the chamber is conducting workshops for business owners across the country.

March 25, 2014