Bahamas VAT Compliance Guide

Your comprehensive guide to VAT compliance requirements in The Bahamas

Important Compliance Notice

This guide provides general information about VAT compliance in The Bahamas. Always consult with a qualified tax advisor or the Department of Inland Revenue for specific advice regarding your business circumstances.

VAT Basics in The Bahamas

Current VAT Rates

Standard Rate: 10% (since July 1, 2024)

Reduced Rate: 5% (effective April 1, 2025 for unprepared food; September 1, 2025 for medicine)

Zero Rate: 0% (exports and specific supplies)

Exempt: 0% (financial services, insurance, residential rent)

Registration Threshold

Businesses must register for VAT if their annual taxable turnover exceeds:

B$100,000
Annual taxable turnover threshold

Voluntary registration is available for businesses below this threshold.

Filing Requirements & Deadlines

Filing Frequency
Monthly Filing

Who: Businesses with annual turnover over B$5 million

Due Date: 21st day of following month

Example: January VAT return due by February 21st

Quarterly Filing

Who: Businesses with annual turnover under B$5 million

Due Date: 21st day after quarter end

Example: Q1 (Jan-Mar) due by April 21st

Quarterly Filing Schedule
Quarter Period Filing Deadline Payment Deadline
Q1 January 1 - March 31
April 21
April 21
Q2 April 1 - June 30
July 21
July 21
Q3 July 1 - September 30
October 21
October 21
Q4 October 1 - December 31
January 21
January 21
Late Filing Penalties: Failure to file on time results in penalties. File early to avoid issues.

Record Keeping Requirements

The Bahamas VAT Act requires businesses to maintain comprehensive records for 7 years:

Required Records

All sales invoices (output VAT)

All purchase invoices (input VAT)

Credit and debit notes

Bank statements and payment records

VAT returns and calculations

Import/export documentation

Stock and inventory records

Invoice Requirements

Tax invoices must include:

Sequential invoice number

Invoice date

Supplier's name, address, TIN, VAT number

Customer's name and address

Description of goods/services

Amount excluding VAT

VAT rate and amount

Total amount including VAT

Digital Records: Electronic records are acceptable if they can be produced in a legible format when requested by authorities.

Input VAT Recovery

Registered businesses can recover VAT paid on purchases related to taxable supplies:

Recoverable

Office supplies

Equipment & machinery

Professional services

Stock for resale

Business utilities

Partially Recoverable

Dual-purpose vehicles

Mixed use premises

Entertainment (50% limit)

Apportionment required based on business use
Not Recoverable

Personal expenses

Exempt supply inputs

Private use items

Non-business purchases

Common Compliance Issues

Late Filing and Payment

Issue: Missing the 21st day filing deadline results in automatic penalties.

Penalty: B$500 for first offense, increasing for repeat offenses.

Prevention: Set calendar reminders 5 days before the deadline. CoralLedger sends automatic email reminders.
Incorrect VAT Classification

Issue: Applying wrong VAT rate to goods/services (e.g., treating standard-rated items as zero-rated).

Impact: Under-collection of VAT leading to assessments and interest.

Prevention: Review our AI-powered categorization suggestions and consult VAT classification guides.
Claiming Ineligible Input VAT

Issue: Claiming VAT on personal expenses or exempt supply inputs.

Impact: Assessment for incorrectly claimed VAT plus penalties.

Prevention: Only claim VAT on genuine business expenses with valid tax invoices.
Inadequate Records

Issue: Failing to maintain complete records for 7 years.

Impact: Penalties during audits and inability to defend VAT positions.

Prevention: Use CoralLedger to maintain digital records automatically with audit trail.
Not Issuing Tax Invoices

Issue: Failing to issue proper tax invoices to customers.

Impact: Customers cannot claim input VAT, potential loss of business.

Prevention: Ensure all sales invoices include required VAT information (see Invoice Requirements above).

VAT Compliance Best Practices

1. Regular Reconciliation

Reconcile your VAT records monthly, even if you file quarterly. This catches errors early.

2. Digital Backups

Maintain cloud backups of all VAT records. CoralLedger provides automatic backup.

3. Stay Informed

Monitor Department of Inland Revenue announcements for VAT law changes and updates.

4. Professional Advice

Consult with a qualified accountant for complex transactions or business changes.

5. Deadline Alerts

Enable email and SMS reminders for filing deadlines. File at least 3 days early.

6. Review Analytics

Use CoralLedger's analytics dashboard to monitor VAT trends and identify anomalies.

Useful Resources

Department of Inland Revenue: deptinlandrevenue.gov.bs

VAT Helpline: +1 (242) 225-7280

Email Support: vat@bahamas.gov.bs

Office: John F. Kennedy Drive, Nassau, Bahamas

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