The government plans to sit with vacation home rental companies like Airbnb and VRBO (Vacation Rentals By Owner) next week to apprise them of their tax remittance obligations come July, after the government announced on Wednesday that those companies will have to attach value-added tax (VAT) to the full value of the vacation rental and not simply the commission earned, Acting Financial Secretary Marlon Johnson said during a post-budget communication press conference yesterday, adding that the bulk of new government revenue is expected to come from this change.
Johnson said while the government expects to forego $24 million to $25 million in tax revenues through newly creative incentives for businesses, it expects to collect about $54 million from the new and enhanced revenue measures announced by Prime Minister Dr. Hubert Minnis during the budget communication on Wednesday. According to Johnson, most of that revenue will be from the vacation home rental market.
“We’ve looked at the numbers there and we actually feel confident that we might beat that particular revenue target,” Johnson said.
“But we always err on the side of being conservative, but even that alone is a significant uptick.”
Johnson said he is confident that the vacation home rental companies that operate locally will agree to the changes.
The government is amending the law to ensure that Airbnb, VRBO and others are required to pay VAT on rentals and commissions and not on the commissions only.
“Airbnb and VRBO around the world have in their brand the willingness and preparedness to pay local taxes,” said Johnson.
“Engaging them is not an issue, it was just how they interpreted the law and their interpretation was that VAT was payable but on the commission only.
“We will start discussions with those entities next week to make them aware that they will have this liability, whether they charge it on or not. So we feel very, very confident that the lion’s share of the new revenue measures we will be able to collect.”