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Vacation home rentals now required to pay VAT

Companies that offer vacation home rental services through the internet and otherwise will now be required to pay value-added tax (VAT), Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday, adding that those who use their properties to offer vacation home rental services do not have to register with the Department of Inland Revenue, as the websites through which they list their homes will remit VAT payments to government.

Turnquest, who made the revelation while presenting the 2019/2020 budget communication in the House of Assembly, said the requirement for online marketplaces like Airbnb, HomeAway and VRBO brings some semblance of equity to the tourism sector in terms of accommodations.

Untaxed vacation home rentals present unfair competition for hotels, as their popularity began to grow over the past several years, and Turnquest said the government was mindful of the uneven playing field that this has created.

The move also increases the collection of VAT and is part of the government’s bid to become a better collector of taxes, rather than raising taxes.

“The recent growth in the vacation home rental market has attracted the government’s attention for several reasons,” said Turnquest. “Understandably, the preferred type of accommodation for tourists globally has taken a turn from hotels, to short-term rentals. For the most part, these rentals are facilitated using a marketplace such as Airbnb, HomeAway and VRBO, among others. We are pleased to see the market growing in this way, as it presents opportunities for many Bahamians to create a new stream of income, while adding capacity to our number one industry.

“All online marketplaces that advertise and facilitate vacation rentals in The Bahamas will now be required to pay VAT on their rental and related sales in The Bahamas.”

According to Turnquest, some of the online marketplaces mentioned have already registered with the Department of Inland Revenue and have been paying VAT.

“We are in the process of ensuring that the outstanding e-commerce service providers are made compliant,” he said.

“Currently, the Value Added Tax Act, 2014 states that all e-commerce services provided for the use, benefit, or advantage of persons within The Bahamas are a taxable supply, even if the providing company is domiciled outside of The Bahamas. This therefore captures all electronic service providers domiciled outside of The Bahamas that provide services to persons within The Bahamas, such as but not limited to Airbnb, HomeAway, VRBO, etc.”

Senior Business Reporter at The Nassau Guardian
Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian.
Education: Florida International University, BS in Journalism
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