• 8% if the value exceeds BSD500,000 but does not exceed BSD700,000
• 9% if the value exceeds BSD700,000 but does not exceed BSD1 million
• 10% if the value exceeds BSD1 million
VAT withholding took effect 1 August 2022, and it requires certain VAT registrants or government agencies (VAT Withholding Agents) to withhold and remit to the government 40% of the VAT due on the payment to specific vendors for the purchase of certain goods or services, on account of the vendors’ VAT payable. The Ministry of Works and Utilities, the Ministry of Education and Vocational and Technical Training, Ministry of Public Service and the Treasury Department are appointed as VAT Withholding Agents, effective from 1 August 2022. These identified VAT Withholding Agents must withhold VAT from all payments above BSD9,999.99 for the following:
• Procurement of construction goods or services for the government
• Commercial leases
• Purchase of materials, building supplies, machinery, fixtures or any equipment
• Purchase of goods and services related to the maintenance, repair or improvement of any machinery, fixture, equipment, buildings or other property owned or leased by the ministry or department
Business license fee. Business license fees are payable by any person conducting or “carrying on” business in or from within the Bahamas. Businesses with gross turnover under BSD100,00 are not required to pay any business license fees. For businesses with gross turnover of BSD100,000 and greater, the rates for business license taxes range from 0.5% to 2.25% based on turnover and the nature of the business.
The license year is the calendar year. Effective from 1 July 2022, businesses are now required to submit the business license renewal application by 31 January each year. Payment for estimated business license tax for the current year must be paid by 31 March or in four equal payments commencing on or before 31 March. The difference between the estimated tax paid and the actual tax due for any given year must be paid by 31 March of the following year.
For businesses that do not need an annual business license, options such as the Occasional Business License (BSD25) and the Temporary Business License (1.5% of the value of the contract), are available.
C. Social security
All employees and employers must contribute to the social security (national insurance) scheme. Contribution rates are based on the amount of weekly or monthly wages. Effective from 1 July 2024, the ceiling increased to BSD810 weekly, BSD3,510 monthly or BSD42,120 annually. The total contribution rate is 11.3% of the employees’ wages, of which 4.65% is withheld from the employee and 6.65% is paid by the employer.