Worldwide VAT, GST and Sales Tax Guide
Nassau GMT -5
EY
Street address:
Mail address: Caves Corporate Centre
P.O. Box N-3231 West Bay Street & Blake Road Nassau Nassau Bahamas Bahamas
Indirect tax contacts
Christine M. Bowers +1 (345) 814-9036 (resident in Grand Cayman, christine.m.bowers@ky.ey.com Cayman Islands)
Olivia Espley-Ault +1 (441) 294-5361 (resident in Hamilton, Bermuda) olivia.espley-ault@bm.ey.com
Erica Culmer-Curry +1 (242) 502-6019 erica.culmer-curry1@bs.ey.com
Tiffany McPhee +1 242 502 6062 tiffany.mcphee@bs.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Value-added tax (VAT)
Date introduced 1 January 2015
Trading bloc membership
Caribbean Community and Common Market (CARICOM)
Administered by Department of Inland Revenue (DIR)
VAT rates
Standard 10%
Special
0.1%, 1%, 2.5%, 4%, 6%, 6.5%, 8%, 9%, 10%
Other Zero-rated (0%) and exempt
VAT number format Tax identification number (TIN) – 123456789
VAT return periods Monthly and quarterly
Thresholds
Registration BSD 100,000
The official currency is the Bahamian dollar (BSD) and its exchange rate is USD 1:1
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the taxable supply of goods and services, including imported goods and services. VAT is applicable on the supply of goods and services at the standard rate of 10%, except in cases where the supply of goods and services is deemed to be either zero-rated or tax-exempt or applies to real estate transaction where reduced rates may apply.
In the Bahamas, a taxable person is defined as a person that carries on a taxable activity who is registered or required to register for VAT as per the VAT Act. The term taxable activity refers to activity in the form of a business being carried on in the Bahamas continuously and for consideration which involves or is intended to involve the supply of taxable supplies.
Insurance proceeds. For taxable persons that receive payment in the form of reimbursement, recovery or indemnification under a contract for taxable insurance services, in respect of loss of or damage to goods or services acquired for the use in the course of furtherance of a taxable activity carried on by the registrant, the following applies: (a) the registrant is deemed to have made a taxable supply; (b) the payment is deemed to be the consideration for that supply; and (c) the payments received by the VAT registrant are deemed to be VAT inclusive.
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, jurisdictions can apply “use and enjoyment” rules that allow a service that is “used and enjoyed” in the jurisdiction to be taxed or prevent a service that is “used and enjoyed” outside the jurisdiction from being taxed. If a service is taxed in the jurisdiction under the “use and enjoyment” provisions, a non-established supplier of the service may be required to register for VAT in every jurisdiction where it has customers that are not taxable persons. In the Bahamas, telecommunications services and electronic commerce services are subject to the “use and enjoyment” provisions. Some categories of impacted services can include web hosting, remote technical support, software sales and maintenance, database management and distance learning.
Transfer of a going concern. The sale of the assets of a VAT-registered or VAT-registrable business was previously subject to VAT at the standard rate. However, a transfer of a business as a going concern (TOGC) is now only subject to stamp duty. A TOGC is the sale of a business or part of a business capable of separate operation, including assets. As of 1 July 2022, transactions relating to the disposition of a business were removed from the VAT Act and returned to the Stamp Act. When a business is sold or ownership otherwise is transferred to another unrelated party, such a transfer is subject to stamp duty at a rate of 6%. The tax is applied to the assets of the business with the exception of cash, deposit accounts and real property. Where such transfers of a business occur that include the transfer of real property, there is VAT levied on the real property at the following rates:
• Transfers of real property to a foreign person are subject to 10% VAT.
• Transfers of real property to a Bahamian company or other Bahamian entity are subject to VAT at the following rates:
– 2.5% where the value does not exceed BSD100,000.
– 10% where the value exceeds BSD100,000.
• Transfers of real property to a Bahamian individual or a Bahamian company that is used solely by the owner for holding real property and does not conduct business are subject to VAT at the following rates:
– 2.5% where the value does not exceed BSD100,000.
– 4% where the value exceeds BSD100,000 but does not exceed BSD300,000.
– 6% where the value exceeds BSD300,000 but does not exceed BSD500,000.
– 8% where the value exceeds BSD500,000, but does not exceed BSD700,000.
– 9% where the value exceeds BSD700,000 but does not exceed BSD1 million.
– 10% where the value exceeds BSD1 million.
VAT payments due and owing relative to the stand-alone transfer of real property or the disposition of a business that includes the transfer of real property are payable to the VAT Comptroller of the VAT Department within 90 days of the completion of the transaction. Relative to the VAT amounts due and owing for real estate transfers as part of the disposition of a business, the liability for payment of said amounts is shared between the parties, jointly and severally.
Transactions between related parties. In the Bahamas, for a transaction between related parties, the value for VAT purposes is calculated at an arm’s-length value. This is unless the collective group of related parties have been approved as a VAT group by the VAT Comptroller. Relatedparty transactions between members of an approved VAT group are not deemed as arm’s length and are not deemed as the provision of taxable supplies.
C. Who is liable
VAT applies to goods or services supplied by a taxable person undertaking, by way of business, a “taxable activity.” In most cases, the taxable supplies must also exceed the annual threshold of BSD100,000 in value. However, there are certain instances where the mandatory registration for VAT is required irrespective of the threshold; these include:
• Where a person or business is domiciled within or outside the Bahamas to the extent that they provide, direct or through an agent, telecommunication service or electronic commerce to persons for the use, enjoyment, benefit or advantage within the Bahamas
• A hotel, condos, residential accommodations that forms a pool or other collective rental agreements
• A marketplace for vacation home rental
• A non-Bahamian homeowner, who supplies a vacation rental and does not utilize a marketplace for the supply of the rental
Exemption from registration. Exemption from registration applies to charitable organizations or a port licensee under certain circumstance in which, prior to making the claim for a refund, must apply for registration. It is possible for certain zero-rated suppliers, mainly in the financial services industry to be exempted from VAT registration. Businesses are required to apply to “opt out” of registering for VAT and this is assessed on a case-by-case basis. Where an exemption is granted, a business cannot recover VAT on costs, as it will not be registered for VAT.
Voluntary registration and small businesses. For businesses that make taxable supplies or taxable importations in the course of conducting taxable activity that do not meet the VAT registration threshold but wish to legally charge and collect VAT, there is a voluntary registration mechanism. Taxable persons that register voluntarily have the same obligations as taxable persons that were required by law to register including but not limited to periodic reporting and remittance of VAT liabilities to the tax authorities.
Group registration. Businesses that operate as a group or are managed as a group can apply for VAT group registration. Where the group registration is approved, the group will use the taxable person identification number (TIN) of the taxable person selected as the controller of the group.
Members of the group are all jointly and severally liable for the liabilities of the group, which include VAT debts and penalties as well as other related taxes levied by the government of the Bahamas.
There is no minimum time period required for the duration of a VAT group.
Fixed establishment. In the Bahamas there is no legal definition of a fixed establishment for VAT purposes.
Non-established businesses. If a company undertakes a taxable or other business activity such as employing persons that work in the Bahamas or deriving income from activities undertaken in the Bahamas, the company is deemed to be a resident/non-established business in the Bahamas.
Non-established businesses are subject to mandatory registration if they make domestic sales of goods and if they specifically sell digital services to consumers in the jurisdiction (i.e., telecommunication services/electronic commerce business). Such non-established businesses are required to apply for VAT registration regardless of the taxable turnover threshold.
Tax representatives. Businesses can appoint a third-party representative, such as an accountant or business advisor, to submit a VAT registration form on behalf of the taxable person. It is also possible to delegate responsibility to manage certain aspects of the taxable person’s account.
Reverse charge. Under the reverse-charge mechanism (known as “self-account” under the Bahamas VAT law), persons that import services, which would ordinarily be subject to VAT if supplied by a local business, generally must account for and pay VAT due. However, the place of supply rules would need to be examined. The VAT Act provides that in the case of imported services, both parties, the importer and the recipient, are jointly and severally liable for VAT arising on the transaction.
Domestic reverse charge. There are no domestic reverse charges in the Bahamas.
Digital economy. No special provisions apply to the digital economy. In practice, a non-established business providing digital (i.e., e-commerce) services would generally be required to register for VAT and charge VAT on their supplies where the services are physically performed or where the benefit is experienced in the Bahamas. While the business license registration requirements for nonresident entities providing digital services are less than the registration requirements for a resident entity, the VAT registration requirements for these entities are the same as resident entities providing similar taxable supplies.
No special additional e-commerce rules exist for supplies of imported goods.
Online marketplaces and platforms. The VAT law outlines guidelines for professional services, which includes similar services of electronic commerce and the supply of internet access. A person must apply for registration where such person, in the course or furtherance of a taxable activity carried on by them, makes taxable supplies or taxable importations and is domiciled within or outside the Bahamas to the extent such person provides, through an agent, telecommunication services or electronic commerce to persons for use, enjoyment, benefit or advantage within the Bahamas, regardless of the registration threshold.
Registration procedures. There are three types of VAT registration that apply in the Bahamas:
• Mandatory, where businesses or operations meet or exceed the VAT registration threshold.
• Voluntary, where businesses do not meet the VAT registration threshold but wish to charge and collect VAT.
• Forced registration, where businesses meet the registration threshold but fail to register.
A person or business liable for VAT must apply to the VAT authorities for registration within 14 days of meeting the requirements. Registration is completed strictly online using the Department of Inland Revenue’s Online Tax Administration System (OTAS) portal. Failure to apply for registration can result in forcible registration by the comptroller and penalties. If applying separately for a business license application, the non-exhaustive list of items required to apply to be deemed a VAT registrant include, but are not limited to, a valid business license issued by the Department of Inland Revenue, NIB number, taxable person contacts (name, address, phone number, email address), listing of directors/partners/shareholders, and the business representative authorization and contact details (name, address, phone number, email address). However, note that additional information and/or approvals may be required based on the review of the application by the Department of Inland Revenue (DIR).
Deregistration. One can apply to cancel the VAT registration where a number of conditions are met. Typically, a company will need to wait two years from the date of registering for VAT before applying to cancel the VAT registration. The conditions do not apply in circumstances where the business effectively ceases to exist.
Changes to VAT registration details. To make corrections to any registration details, the taxable person is required to submit a contact update request, known as a “change of circumstances” through the OTAS portal providing the updated information in the appropriate boxes of the form and including any documentation in support of the request. A representative of the DIR would then review the request and advise of next steps to approve the request or indicate the reason of the tax authority’s denial of the request. All corrections are to be submitted through DIR’s OTAS portal.
There are no specific time limits to notify such changes.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 10%
• Special rates: 0.1%, 1%, 2.5%, 4%, 6%, 6.5%, 8%, 9%, 10%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for a reduced rate, the zero rate or an exemption. The standard rate was reduced from 12% to 10% as of 1 January 2022.
Examples of goods and services taxable at 0%
• Services that relate to land and property situated outside of the Bahamas
• Goods physically removed from the Bahamas or outside the Bahamas at the time of supply
• Certain professional, financial and insurance services where the benefit is obtained outside the Bahamas
• Transfer of a business as a going concern by a registrant supplier to a registrant recipient where certain conditions are met
• Services of a foreign-going vessel providing international commercial services, where the supply is made directly and not through an agent or other person.
Examples of goods and services taxable at special rates
• Flat-rate scheme provides that VAT is charged and collected on supplies at the standard rate. However, rather than calculating the input tax each VAT period, the taxable person applies the flat rate of 6.5% to VAT inclusive sales and pays this amount to the comptroller.
• A reconveyance of real property from a mortgagee to a borrower or mortgagor only, is subject to VAT at 0.10% of mortgage amount.
• A mortgage or transfer of mortgage of real property is subject to VAT at a rate of 1% of mortgage or transfer of mortgage amount.
• Transfers of real property to a foreign person are subject to 10% VAT.
• Transfers of real property to a Bahamian company or other Bahamian entity are subject to VAT at the following rates:
– 2.5% where the value does not exceed BSD100,000.
– 10% where the value exceeds BSD100,000.
• Transfers of real property to a Bahamian individual or a Bahamian company that is used solely by the owner for holding real property and does not conduct business are subject to VAT at the following rates:
– 2.5% where the value does not exceed BSD100,000.
– 4% where the value exceeds BSD100,000 but does not exceed BSD300,000. – 6% where the value exceeds BSD300,000 but does not exceed BSD500,000.
8% where the value exceeds BSD500,000, but does not exceed BSD700,000.
9% where the value exceeds BSD700,000 but does not exceed BSD1 million.
– 10% where the value exceeds BSD1 million.
The term “exempt supplies” refers to supplies of goods and services that are not liable for VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Services directly and not through an agent or other person to a person resident outside the Bahamas who is not a taxable person (only applicable to certain circumstances).
• Certain insurance services, specifically life insurance, annuities and savings products, and insurance contracts on dwellings that are owner-occupied.
• Medical services provided by a public health care facility to a public patient.
• Rental of a dwelling meant to be a primary place of residence.
Option to tax for exempt supplies. The option to tax exempt supplies is not available in the Bahamas.
E. Time of supply
The time of supply is the date when a sale is considered to take place for VAT purposes. The time of supply is the earliest of:
• The date an invoice is issued.
• Receipt of payment is made.
• The date goods are delivered or made available to the recipient.
• The date the performance of service is completed.
Deposits and prepayments. Where a deposit or prepayment is received, regulations provide that a tax point is created, and VAT (in the form of output tax) will become due on the amount of the deposit or prepayment. The amount of VAT due is typically calculated using the VAT fraction. The VAT fraction is calculated in accordance with the formula (R/(1+R)) where R is the rate of VAT expressed as a percentage applicable to the price of the taxable supply.
If the deposit is held in an escrow account, i.e., one the taxable person does not have access to, this is not considered a payment. The output tax does not need to be declared until the amount is released.
Where the deposit is nonrefundable, and the customer does not buy goods or services on which the deposit was paid, this is considered a payment subject to VAT at the applicable rate.
Finally, if the deposit is intended to be refunded, the legislation does not require the taxable person to treat the payment as consideration and therefore, there is no need to declare VAT on the payment. However, if at some later time, it is determined that the taxable person is entitled to keep the deposit, then this is a supply and VAT must be declared.
Continuous supplies of services. Where there is a continuous contract for services and payment is required at certain stages, a VAT invoice should be issued when each payment is due. The invoice should detail the charge for that particular stage and the amount of VAT charged.
Goods sent on approval or for sale or return. The tax point occurs when the title to the goods is transferred. Therefore, if a supplier transfers inventory to a customer with the agreement that the title is retained by the supplier until the customer sells or uses the inventory, a tax point is not created, and any unused inventory can be returned to the supplier and will not be subject to VAT.
Reverse-charge services. There are no special time of supply rules in the Bahamas for supplies of reverse-charge services. As such, the general time of supply rules apply.
Leased assets. The time of supply for the supply leased assets (providing for periodic payments) is when a payment becomes due or when payment is received, whichever comes earlier.
Imported goods. Import VAT may apply to goods entering the Bahamas. The importer of a taxable importation must, on entry of the goods, submit an import declaration to the comptroller of customs and pay the VAT due.
F. Recovery of VAT by taxable persons
Generally, input tax can be reclaimed when the VAT was paid on purchases that relate to supplies liable to VAT at the standard rate or the zero rate, i.e., taxable supplies.
The time limit for a taxable person to reclaim input tax in the Bahamas is three years. A claim for a refund must be made within three years after VAT reporting. Currently, the OTAS portal automatically applies available input tax credits (VAT credits) to the next tax period where there is a VAT liability and allows the remaining credits to be carried forward.
Nondeductible input tax. Input tax credit is not recoverable if the VAT was paid on goods or services that are not used, or intended to be used, in the course or furtherance of a taxable activity. Where goods have a business and personal use, the taxable person must apportion the VAT to the business and nonbusiness uses, claiming input credit only for the business portion.
Examples of items for which input tax is nondeductible
• Fees or subscriptions for membership of any club, association or society of sporting, social or recreational nature.
• Petroleum and similar products that are used for nonbusiness purposes.
• A passenger vehicle where the claimant does not carry on the taxable activity of providing transportation services. Even where the claimant does carry on this taxable activity, no input tax credit is allowed if the vehicle was not acquired for the purposes of this taxable activity.
• Entertainment, unless the claimant is in the business of providing entertainment or the entertainment is wholly for all employees as part of a reward for services rendered or it is an expense directly related to the creation of a taxable activity (“entertainment” means food, beverages, tobacco, accommodation, amusement, recreation or other hospitality of any kind).
Examples of items for which input tax is deductible (if related to a taxable business use)
• Entertainment expenses incurred wholly for the employees as part of a reward for services provided.
• VAT paid on utility bills related to the business.
Partial exemption. A partial recovery calculation is required where costs incurred relate to both taxable and exempt supplies. Regulations provide a standard method of apportionment to calculate the amount of input tax the taxable person is entitled to claim.
The standard method of appointment is calculated as follows:
A x B/C
• A is the total amount of the input tax payable in respect of supplies and imports received during the period, less the sum of the input tax attributable to supplies or imports acquired or made, which are directly allocable to the making of taxable supplies and in respect of deductions that are disallowed under the VAT Act.
• B is the total amount of taxable supplies made by the taxable person during the period.
• C is the total amount of all supplies made by the taxable person during the period.
A taxable person may, where the fraction B/C is more than 0.90, deduct the total amount of the input tax on the supplies/imports acquired or made during the period.
clearly displayed so that customers can determine what is subject to VAT and at what rate before they pay for the goods. The unit price of each item on a sales receipt may be VAT inclusive or exclusive.
Self-billing. Self-billing is not allowed in the Bahamas.
Proof of exports. When goods or services are transported or transferred from within the Bahamas to a country or place outside the Bahamas where the use, benefit or advantage of the goods or services is obtained or enjoyed outside of the Bahamas, the zero-rate applies. Zero rating maybe applicable to exports out of the Bahamas, if the VAT registrant meets the following conditions:
• The registered supplier, i.e., the entity registered for VAT, has entered the goods for export in accordance with the Customs Management Act, and the goods are, in fact, exported by the registered supplier.
• The comptroller is satisfied that the goods have been exported from the Bahamas and were not used after they were entered for export except such use as was necessary for, or incidental to, the export of the goods.
• The taxable person must have the relevant documentation to prove it is the exporter of record.
Foreign currency invoices. The VAT Act and Regulations do not specify which currency is to be stated on invoices. The official currency is the Bahamian dollar (BSD) and its exchange rate is USD 1:1. As per the VAT Act, invoices are to be denominated in money, which is defined as the currency used or circulating in the Bahamas. In practice, within the Bahamas, it is permissible to issue invoices in any currency. However, the ability to retain foreign currencies in the Bahamas requires explicit permission from the Central Bank of the Bahamas.
Supplies to nontaxable persons. If a VAT-registered supplier makes retail sales, it can issue a simplified VAT invoice or a VAT sales receipt, whereby items subject to VAT (or not subject to VAT) can be identified on the receipt with a symbol such as an asterisk, provided the total amount of VAT is clearly shown on the receipt. The method of identification must be clearly displayed so that customers can determine what is subject to VAT and at what rate, before they pay for the goods. The unit price of each item may be VAT inclusive or exclusive.
Records. Reliable accounting records in the English language must be maintained; however, there is not a legal requirement that stipulates the records to be physically maintained within the Bahamas. In the Bahamas, examples of what records must be held for VAT purposes include records of all supplies and purchases, i.e., a copy of all sales invoices, debit and credit notes, receipts and all purchase invoices either in paper or electronic form. If a taxable person does not possess a copy of an invoice on which VAT was paid or import documents showing the VAT amount, the VAT is not recoverable. In the Bahamas, VAT books and records can be kept outside the country. However, while records are not required to be physically maintained within the Bahamas, a taxable person’s records should be readily accessible should the tax authorities request to view them.
Record retention period. Records are required to be kept for five years after the end of the tax period of which the taxable person ceases to be a registrant and where the occurrence of the taxable transaction to which the records relate. Notwithstanding, the statute of limitations is seven years.
Electronic archiving. Electronic archiving is allowed in the Bahamas. Records must be kept for all supplies and purchases. This means keeping a copy of all sales invoices, debit and credit notes, receipts and all purchase invoices either in paper or electronic form. All sales invoices must be sequentially numbered so if a taxable person spoils an invoice and has to issue a new one, the taxable person must keep a copy of the spoiled invoice. If a taxable person does not hold a copy of an invoice on which it has paid VAT or import documents showing the VAT amount, it is not entitled to recover the VAT on these costs, so it is very important to keep such documents. The records a taxable person keeps must be such that the comptroller can determine, with reasonable accuracy at any time, the liability of the taxable person to pay tax.
I. Returns and payment
Periodic returns. The timelines for filing VAT returns are as follows:
• Taxable persons with an annual turnover greater than BSD5 million are required to file a monthly VAT return.
• Taxable persons with an annual turnover of less than BSD5 million are required to file a quarterly VAT return.
The VAT return should show:
• The VAT charged on sales in the period (output tax)
• The VAT paid on purchases (input tax)
VAT returns are due 21 days following the previous month. Further, should the filing due date fall on a weekend or public holiday, the VAT return is due on the following business day (which would typically be the Monday following the weekend, provided that the Monday is not observed as a public holiday).
Periodic payments. Where the amount of output tax is greater than the input tax, the difference must be paid to the comptroller. It is required to pay any VAT due to the comptroller within 21 days after the end of the VAT period so effectively the taxable person needs to file the VAT return and pay any amount due by the 21st day of the month following the last day of a VAT period.
VAT can be paid in the following ways:
• Using a debit or credit card via the online portal
• Via a taxable person’s online banking service
• Paying over-the-counter at the taxable person’s bank
• Presenting cash/manager’s check at any bank
All payments must include the related tax identification number (TIN) and reach the VAT Department by the due date.
Electronic filing. Electronic filing is mandatory in the Bahamas for all taxable persons. The OTAS portal was developed to assist taxable persons to manage their VAT accounts. This system allows registered taxable persons to file VAT returns and payments electronically. Other services available online may include taxable person inquiries, payments and refunds. The OTAS portal is the only method in which VAT reporting can be completed and submitted to the tax authority. Paper submissions are not permitted.
Payments on account. Payments on account are not required in the Bahamas.
Special schemes. Flat rate scheme. The flat rate scheme is for small businesses with annual taxable turnover of BSD400,000 or less. The flat rate scheme provides that VAT is charged and collected on supplies at the standard rate. However, rather than calculating the input tax each VAT period, the taxable person applies the flat rate of 6.5% to gross sales and pays this amount to the comptroller.
Cash accounting. Businesses are permitted to account for VAT on a cash basis in certain circumstances. Suppliers declare output tax on the VAT return in the same period during which customers pay. Similarly, a taxable person using the cash basis, would only declare and reclaim input tax on the VAT return in the period when it has paid its suppliers.
Annual returns. Annual returns are not required in the Bahamas.
Supplementary filings. No supplementary filings are required in the Bahamas.
Correcting errors in previous returns. To make corrections to any errors or omissions on VAT returns, taxable persons are expected to prepare an amended VAT return for the impacted period, if it is within the preceding year. For any corrections for a period outside of the preceding year,
the taxable person is required to submit an enquiry through the OTAS portal outlining the correction being requested, the value of the correct, the impacted period and any documentation in support of the request. A representative of the DIR would then review the request and advise of next steps to approve the request or indicate the reason of the tax authority’s denial of the request. All corrections are to be submitted through DIR’s OTAS portal.
Digital tax administration. There are no transactional reporting requirements in the Bahamas.
J. Penalties
Penalties for late registration. There is no specific penalty in the Bahamas for late registration of VAT. However, if a taxable person fails to apply for registration, that person commits an offense and is liable to a fixed penalty up to BSD150,000 or imprisoned for a term not exceeding 12 months or both. The law also prescribes, the taxable person who failed to become a VAT registrant will be liable for any VAT owed on taxable supplies, at the standard rate appliable for each period plus interest accrued on the late payment at a rate of prime plus 1%.
Penalties for late payment and filings. Regulations impose heavy penalties for noncompliance. An offense is committed when VAT is not paid when due for two or more consecutive or nonconsecutive tax periods. One can potentially be liable on conviction in court to a fine not exceeding BSD10,000 and imprisonment for a term not exceeding six months or both. In the case of nonpayment or late payment of tax pursuant to a VAT return or notice of assessment, the taxable person shall be subject to 10% of the amount of tax owed. Interest in respect of the outstanding amount at a rate of prime plus 1%.
A registrant shall be subject to a fine in the case of late filing of their VAT return. In the case of the filing of a late VAT return, non-filing of a VAT return or failure to file a VAT return in the prescribed form, the fine imposed on the registrant shall be the greater of the sum of BSD100 or 2% of the tax payable.
Penalties for errors. Errors in the declared VAT amounts, whether input or output tax, can be adjusted on the next VAT return provided the error does not exceed BSD500. Where the error exceeds this amount, the taxable person should notify the comptroller. If the error is not discovered promptly and is not considered deliberate, the taxable person may only be charged interest on amounts owed and the associated fine may be waived.
There are no specific penalties associated with the late notification or failure to notify of changes to a taxable person’s VAT registration details. For further details, see the subsection Changes to VAT registration details above.
Penalties for fraud. An unregistered or nontaxable person collecting, advertising or quoting VAT in respect of a taxable supply made to another person is liable on conviction to a fine not exceeding BSD70,000.
A taxable person submitting statements to the comptroller or VAT officer that are falsified, omit information or are misleading are liable on conviction to the sum of BSD150,000.
A taxable person who includes a false taxable person identification number on a document is liable on conviction to a fine not exceeding BSD150,000.
Personal liability for company officers. For taxable persons, directors or similar officers, pursuant to Section 76, the fixed penalties that can be assessed on these representatives for failure to comply with Sections 73 (duties of receivers/liquidators) and 74 (tax representatives) of the VAT legislation, amount to a maximum of BSD100,000 and BSD30,000, respectively. Tax representatives can also be held liable for contraventions of Section 92 (false or misleading statements), the fixed penalty for which is BSD150,000.