What is the Bahamas Sales Tax Rate?

The Bahamas is not a place where one would find the traditional sales tax, which is common in most other countries; however, the country is still using a VAT system.

Since January 2022, the standard VAT rate in the Bahamas has been 10%. Starting from April 2025, a reduced VAT rate of 5% applies to basic food items sold in grocery stores. While not a traditional sales tax, the Bahamas’ VAT effectively serves as the country’s comparable consumption-based tax.

Understanding VAT in the Bahamas

• Standard rate: 10% applied to most goods and services, with a reduced rate of 5% introduced in 2025 for essential items such as basic food products, medicines, and personal hygiene goods.
• Exempt sectors: Certain healthcare and educational services, specific financial transactions, and limited categories of real estate supplies.
• Zero-rated items: The main point is exports and a small number of international services, which are taxed at 0% to attract trade and competitiveness.

Unlike a regular sales tax that is only charged at the final point of sale, VAT is collected from each stage of the supply chain.

In addition, businesses that are registered for VAT are allowed to reclaim the tax paid on their own purchases, with the result that the burden for the final consumer should be the lowest one.

Why This Matters

With a standard VAT rate of 10% and a reduced rate of 5% on essentials introduced in 2025, the Bahamas maintains one of the lowest consumption tax regimes globally, increasing its attractiveness for both consumers and investors. Due to this, the Bahamas is an attraction not only for the visitors and locals but also for the businessmen and the global investors who make good use of the lower consumption-based taxation.

Compliance for Businesses

Any company with taxable sales above BSD 100,000 annually must register for VAT. Registered businesses:

• Charge VAT on taxable supplies.
• File periodic VAT returns.
• Claim credits on eligible input VAT.

For businesses and investors, understanding how VAT operates in place of a sales tax is crucial. Offshore Company Services assists clients with VAT registration, corporate structuring, and ongoing compliance in the Bahamas, helping them take full advantage of the jurisdiction’s tax-friendly environment.