VAT Will Help Bahamas
July 21, 2014 Taxation in Bahamas
NASSAU – The extra tax revenues that the Bahamas will see after implementing VAT will help the country reduce its budget deficit by 0.5 percent this year alone.
Over the weekend the International monetary Fund issued a statement describing the results of a recent on-site visit of the Bahamas, showing that the national government is making progress towards improving its fiscal position, but the growth is dependent on the smooth implementation VAT in the near future.
According to the IMF, the fiscal deficit in the country has now reached 4.5 percent of GDP, compared to a level of 5.4 percent last year.
If the government does not run into any delays in implementing VAT, over the course of the 2014/2015 fiscal year, the fiscal deficit may drop as low as 4 percent.
If the VAT is implemented as currently planned, the country may see a significant drop in the level of its external debt, boosting investor confidence, thereby drawing more foreign investment, boosting the number of jobs in the country, and seeing even higher tax revenues.
The IMF urged the government to finalize any steps that still need to be taken in order to enact the VAT as soon as possible, in order to avoid any unnecessary or unforeseen delays.
The VAT was proposed by the government last month, and will be levied at a rate of 7.5 percent, and is expected to raise total tax revenues by as much as USD 305 million per year.
Photo By: Valéria Almeida