What is the VAT tax in the Bahamas?

The Bahamas Value Added Tax (VAT) is a significant portion of the nation’s tax structure and has an impact on companies and consumers. It is a value-added tax and is levied on most supplies of goods and services sold for consumption in the country.

Important Aspects of VAT in the Bahamas:

• Current VAT Rate: As of 2025, the standard VAT rate is 10%, reduced from the previous 12% (effective since January 2022).
• VAT Registration: VAT registration is mandatory for businesses whose annual turnover exceeds BSD 100,000.
• Taxable Transactions:
• Domestic sale of goods and services.
• Import of goods into the Bahamas.
• Exemptions and Zero-Rated Supplies:
• Financial services.
• Medical and educational services.
• Certain exports may be zero-rated.
• VAT returns: Companies registered are required to file periodic returns with the Inland Revenue Department.
• Compliance: Not complying with VAT obligations may attract penalties, interest or cancellation of business operations.

For those who are opening a business or an offshore company in the Bahamas, dealing with VAT can be quite a crucial matter. However, the Bahamas is income and capital gains tax neutral, with VAT attached to local activities. Work with a credible corporate service provider such as Offshore Company Corp to be fully compliant and tax-efficient.