6 October 2014
The troubled birth of a VAT system in The Bahamas is reaching a conclusion, but there is still some doubt about the exemption for insurance. It appears from the latest draft of the legislation that the tax will be introduced on 1 January 2015, with an exemption for financial services which includes life insurance policies and annuities/savings plans. However, the intention is to tax general insurance, with an “introductory” exemption applying only until 30 June 2015.
Zero rating will apply to all insurance if the insured is outside The Bahamas, except where the (general) insurance relates to a property in The Bahamas or to a vehicle, ship or aircraft registered in The Bahamas when the introductory regime will apply prior to full taxation from July 2015.
Interestingly, import VAT is payable on imported services – even by a natural person. So from 1 July 2015 it appears as though the insured will need to make an import declaration and pay 7.5% VAT on insurance premiums, directly to the Comptroller within 7 days of paying the premium to an overseas insurer. For an insured business in The Bahamas there will be a deferment regime to allow the VAT to be paid on a VAT return, subject to conditions.