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State Minister for Finance, the Hon. Michael Halkitis explains how VAT will not affect the basic needs but complement the government's revenue collection process according to global standards (BIS Photo / Gena Gibbs).
Nassau, The Bahamas - Explaining to relevant stakeholders how the Value Added Tax (VAT) regime will apply to their Hotels and Tourism related businesses is the first step in fine tuning this reformed tax policy.
State Minister for Finance, the Hon. Michael Halkitis explained to stakeholders that the Government is aware that investors will need details in a timely fashion for financial year planning to include the most recent costs of doing business in The Bahamas. Minister Halkitis also explained the misconceptions of the VAT and dismissed the unsupported notions that this new tax will merely represent an added burden on all goods and services. He said it is simply not true that taxes are collected at each stage of the production and distribution process, which would result in taxes being layered upon taxes.
"Like a Sales Tax, the Value Added Tax is a tax on the sale of goods and services. Although the sales tax is only collected when a final sale to a consumer occurs, the VAT is collected at every stage of the production and distribution chain. This introduces checks and balances throughout the systems that are designed to minimize tax avoidance and to increase compliance, " said State Minister Halkitis.
"Every time an item is sold from one person to another in the chain, VAT is charged by the seller to the buyer. However, the seller does not remit the full amount of VAT collected. Rather, he deducts from that amount any VAT that he paid on the materials and supplies that he bought to finish the product that he sells. He therefore sends VAT to the Government only on the value that he himself added to the product. Hence the name 'Value Added Tax'."