Patients are warned: Brace for VAT ‘shock’

impact medical bills of varying sizes. The first involved a patient requiring $2,000 worth of treatment, with their ‘out-of-pocket’ costs pegged at $250. Under the present tax treatment, they only have to pay VAT worth $25 (10 percent) on that $250 share, leaving their share of the medical care expense at $275.

Yet, when insurers are unable to reclaim that VAT, the patient will now also be liable for paying the 10 percent levy on the $1,750 claims payout. This will add a further $175 to their bill, taking the total amount they must fund to $450 - a 63.6 percent increase in their financial burden.

The sums and percentage increases become greater the higher the cost of care.

The final example involves a patient who requires a fivenight hospital stay that incurs $12,500 in medical bills. The ‘out-of-pocket’ expense is $500 and, under the current structure, the patient will only pay 10 percent VAT on that latter sum, incurring $50 in tax and taking the total payment to $550.

However, from April 1, the patient will also have to pay the VAT levied on the insurer’s $12,000 claims payout.

That will amount to $1,200, taking the patient’s own payment to $1,750 - a more than three-fold increase from what his/her financial exposure would be currently.

Mr Rolle said it was impossible to presently determine how businesses (group health insurance) and individuals will react to the prospect of increased medical bills and premiums, but warned that this will only worsen healthcare industry inflation that is typically running at 7-10 percent annually. And, with patients/consumers already paying VAT on their premiums, he added that mandating they also pay the tax on claims payouts was “clear double taxation” with the industry unable to grasp why the Government had decided to alter the tax treatment. The Ministry of Finance, though, says the change is necessary because allowing insurers to reclaim VAT on claims payouts breaches the law and is depriving the Public Treasury of millions in vital revenues. “Medical inflation across the board is already, give or take, 7-10 percent,” Mr Rolle told Tribune Business. “The [insurance] industry has really tried to hold down costs over the last three years as we were going through the pandemic, but at no point did medical inflation stop during that period.

“It will be very difficult to offer coverage at similar levels without raising the premium and, in addition to that, as we look at the impact on cost, it’s not just related to medical services such as seeing a doctor but recurring services such as medicines and therapy. The VAT related to those will now be borne by the person receiving the service or medicine. Definitely more expensive, certainly less accessible.”

The Insurance Commission of The Bahamas’ annual report for 2021, containing the last set of available data, shows that almost $206m worth of health claims were paid by Bahamian insurers that year. That was split into $175.202m on behalf of group clients, usually businesses providing coverage for their employees, and $30.716m for individual policyholders.

Most of that $206m would have been spent at home due to the COVID restrictions that were in place at the time. This sum is thought to include VAT. Using the 12 percent rate prevailing at the time gives a figure of $24.72m, which is an admittedly crude estimation of the collective VAT burden that would have been reclaimed by reinsurers then. Under the current VAT rate, this would equate to $20.6m.

Both figures, though, give an indication of the total taxation/financial burden being transferred from insurers to patients/consumers due to the VAT treatment change. Mr Rolle said it was impossible to estimate how many employers and individuals may elect to drop private health coverage as a result, with much depending on how companies - already facing multiple other cost increases - react.

“We’re not able to assess that until the final changes are made to premiums,” the BAF chief said. “As it’s happening in all areas, consumers can certainly expect increases. It’s the cost of care that will increase as well as the premium. The cost of care increase, based on the cost of charges for services in addition to the VAT, will be borne directly by consumers. They will be expected to pay VAT on all the services they

PUSH REFORMS TO MAKE ‘REAL DENT’ IN CORRUPTION

N

OLIVE THREE INVESTMNETS LIMITED

N O T I C E IS HEREBY GIVEN as follows:

(a) OLIVE THREE INVESTMENTS LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(b) The dissolution of the said company commenced on the 25th January, 2023 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

Dated this 1st day of February, 2023

Bukit Merah Limited Liquidator

FROM PAGE A24 opportunity” for The Bahamas to improve both its standing in the Transparency International rankings and reduce perceptions of corruption that may exist internationally. He added that reforms had been enacted, but the country was receiving little credit for them.

“There are many things we are doing now that involve changes. We have greater reliance on technology, the digitisation of government services,” he added. “We have a Procurement Act that was passed and, had we followed it, it would have introduced a different level of transparency and integrity into government procurement.... If we bring these things to fruition, there should be a return on that,” receive. It’s certainly significant for the consumer.”

Suggesting that tertiarylevel patients may seek to escape higher medical bills by accessing treatment overseas “where the option does exist”, Mr Rolle said the Bahamian insurance industry has yet to decide whether to challenge the Ministry of Finance and Department of Inland Revenue’s new interpretation before the Tax Appeals Commission.

“I don’t know if there will be a formal appeal. Those discussions are still ongoing,” he added. “We will continue to dialogue with the Government. We will work with the [medical] providers such that we are ready for the transition as indicated.”

Tribune Business understands that doctors and other medical practitioners, as well as pharmacists, dentists and optometrists, are now scrambling to adjust their computer systems and business models in the two months remaining before the revised VAT treatment of insurance claims payouts takes effect.

From April 1 onwards they will be responsible for collecting and remitting this VAT to the Government, but were not involved in the talks with the insurance industry and are only now just being informed of the change. One medical source, speaking on condition of anonymity, said: “It’s going to put our administration to task because we have to follow it through and work it.

“It’s going to shift the burden to doctor’s offices, pharmacists and dentists’ offices to collect the VAT. The stakeholders are not all

The ORG chief said The Bahamas was thus far failing to link such reforms together, with the Transparency International index showing it had “not really moved forward the way we could” and “moved us away from an environment where corruption flourishes”.

He added that there were real benefits to be gained from being “seen as a place where corruption does not flourish”, including individuals and companies more willing to follow the rule of and pay due taxes. The Bahamian business environment will also become more competitive, with the best qualified bidders winning government contracts so that tax dollars are put to their best and most efficient use.

High-quality investors, as opposed to rogue operators, will also be attracted to do business in and with The Bahamas, Mr Aubry said. “What we gain from this has economic benefits as well as social ones,” he explained.

N O T I C E YASRAB LIMITED

N O T I C E IS HEREBY GIVEN as follows:

(a) YASRAB LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(b) The dissolution of the said company commenced on the 24th January, 2023 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(c) The Liquidator of the said company is Leeward Nominees Limited, Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands.

Dated this 1st day of February, 2023

Leeward Nominees Limited Liquidator privy to this information. We found at late. We are learning about it and having discussions on it.”

Mr Rolle, meanwhile, refuted the Ministry of Finance’s suggestion that insurers and the BIA are seeking to spread unnecessary fear and alarm among consumers about the financial impact of the changed VAT treatment. “My onthe-record response to that is the industry is not seeking to cause fear or alarm,” he said. “The industry is simply seeking to provide clear information to our consumers.

“The Department of Inland Revenue and Ministry of Finance indicated to the industry what their expectations were, and in anticipation of the transition the industry is looking to inform its customers of the changes. There’s impact even at the smallest levels as it relates to changes in the interpretation of the Act. We want to make sure our consumers know they must pay the VAT.

“The industry is not politicising anything related to VAT or the treatment of VAT. We believe the public needs to be aware the change is coming in the near future, and the impact this will have on each of the consumers of medical services as well as each of the insurers in the industry. Based on the discussions with members of the BIA, all the insurers are expected to treat the changes in VAT in the same way.”

The Ministry of Finance, though, is arguing that it is “clearly against the VAT Act” for insurers to claim back the 10 percent levy on

“It requires us to think about what we do in pushing forward legislative reform.” medical claims payouts - a practice allegedly costing the Public Treasury millions of dollars. It added that one audit of an unnamed health insurance provider in 2021 showed it had “received over $20m illegally” through this mechanism.

Pointing to the longpromised implementation of the Freedom of Information Act as an example, he added that The Bahamas needs “to make sure that advances; we haven’t moved it forward”.

Mr Aubry continued: “Let’s look at how we empower our citizens by understanding the damage and cost of encouraging low-level corruption to move things along.

“It further disenfranchises those that have less when we encourage a ‘pay to play’ environment, and now with costs rising people have less to pay if they’re required to give lunch money and tip money to access government services.” Besides reforms to the Public Procurement Act and Public Disclosures Act, Mr Aubry again urged the Government to move ahead with the Integrity Commission and Ombudsman Bills that did not proceed under its predecessor.

Its, and the Department of Inland Revenue’s position, is that VAT is payable on medical insurance claims payouts because these are being made on behalf of the enduser - the consuming patient - and thus should attract the tax. Health insurers are currently claiming this as ‘input’ VAT, offsetting it against their ‘output’ tax on premiums and effectively allowing the likes of Colina, Family Guardian and CG Atlantic to claim it back from the Government.

However, the BIA is arguing that the Ministry of Finance is wrong to treat the payment of clients’ medical expenses and the care received from providers as two separate services. Its case is that since health insurance and medical services are both VAT-able, health insurance claims should continue to be tax-deductible for health underwriters, otherwise the Government would be knowingly applying two layers of VAT.

One insurance source, though, speaking on condition of anonymity, said: “The Department of Inland Revenue has changed its interpretation of what the law is. It hasn’t changed the law. What they’re saying is the insurance companies are not the beneficiaries of the service and, as such, the insurance companies are not to claim back the VAT related to any payout. If the insurers are not the ones receiving the service, then the one doing so has to pay the VAT.”

Noting that both were campaign pledges in the Progressive Liberal Party’s (PLP) so-called Blueprint for Change, he argued: “If we put that forward as a priority in the next year we will have four significant pieces of legislation that advance and make a real dent in corruption perceptions of The Bahamas, make us a benchmark for the region, and create tangible opportunities for people in small business and elsewhere to have greater trust that the taxes they pay will advance multiple effects they see in their day-to-day lives.”

Mr Aubry said ORG will be hosting an AntiCorruption Symposium on March 3 that aims to bring government, civil society, non-profits and the private sector together to identify “the gaps we have to fill” and advance the cause of greater transparency and accountability throughout Bahamian society.

N O T I C E HHW COMPANY LTD.

N O T I C E IS HEREBY GIVEN as follows:

(a) HHW COMPANY LTD. is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(b) The dissolution of the said company commenced on the 25th January, 2023 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

Dated this 1st day of February, 2023

Bukit Merah Limited Liquidator

N O T I C E INFINITY JOY LIMITED

N O T I C E IS HEREBY GIVEN as follows:

(a) INFINITY JOY LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.

(b) The dissolution of the said company commenced on the 23rd January, 2023 when the Articles of Dissolution were submitted to and registered by the Registrar General.

(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas

Dated this 1st day of February, 2023

Bukit Merah Limited Liquidator