Change In Tax System/Haven Status

• Author: Derence A. Rolle Davis
• Pages: 137-141

The Law: The Social and Economic Effect on The Bahamas 2000 - 2020

30.CHANGE IN TAX

SYSTEM/HAVEN STATUS

For all households, The Bahamas being no different, there are demands

for each person to assist in paying for the upkeep and repairs or maintenance of

the spaces and home. Keeping in mind the outcome of the needs of the citizens,

a payment or income outside of the work done is required. That alternate source

of income is that of a new tax system.

Value Added Tax (VAT) was first implemented in The Bahamas in 2015.

For the first time ever, VAT was charged on expenditure. Income tax was argued

as a thing that would not happen in The Bahamas because the Government was

able to tax those that could afford more through the importation of goods. That

usually meant things imported into the country, for example such as big ticket

items such as cars and boats (yachts) and luxury items such as jewellery and

accessories. It was generally believed that poor people would not be caught in

this wave of expenditure since they would not and could not buy such items as

listed.

What the Government relied on is the duty earned from Customs and

Real Property tax to supplement the income on the Gross Domestic Product

(GDP) to assist the country in the debts owed and the constant infrastructural

needs. Stamp tax and the head tax on tourist and hotel taxes assisted in the

income of the country.

The Bahamas was touted as a tax haven and gave assurances of secrecy in

the banking industry. With a stroke of a pen the law changed by successive

enactments of legislation between 1999-2002 and the means of the citizens and

name of the game in The Bahamas would never be the same. We boasted that the

need for sales tax would not be necessary because the cost of living would rise

too high.

The Bahamas is classified as a tax haven, although some may argue that it

is no longer one and others beg to differ. We need to really understand what a

tax haven is. In reality, tax havens offer a lower tax rate to people for their money

than they receive in their own countries. Storing funds in offshore institutions to

avoid personal and corporate taxes is the means by which many such persons

seek to gain that advantage.

Moving patents, codes, formulas, or algorithms to the tax haven saves a

tremendous amount in taxes. Having a branch in a tax haven allows for the

movements of things such as patents and helps in reducing tax payments.

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