How much is VAT Tax in the Bahamas?

The Value Added Tax (VAT) in the Bahamas forms the base of the country’s tax structure, and those who are doing business here or planning to invest should definitely know about it.

Current VAT Rate

• Since January 2022, the Bahamas has applied a standard VAT rate of 10%. Starting from April 1, 2025, a reduced rate of 5% applies to essential food items sold in food stores, while most other goods and services remain subject to the 10% rate.
• The 10% standard VAT applies to most local goods and services. However, a reduced 5% VAT rate applies to essential food items from April 2025, and will be extended to other essentials such as medicines, baby products, and feminine hygiene products from September 2025.

Exemptions and Zero-Rated Items

Not everything falls under the 10% rule. Some categories are treated differently:

• Zero-rated supplies: Mainly exports, which are assigned a 0% tax rate.
• Exempt goods and services include healthcare, education, specific financial services, and certain real estate transactions (for example, the sale of previously occupied residential property).

With this plan, the country not only secures access to the necessary services but also remains attractive in the global market of trade and investments.

VAT for Businesses

• Businesses that have annual sales above taxable BSD 100,000 are obliged to register for VAT.
• Companies that are registered are the ones that include VAT in their sales; however, they are allowed to recuperate the VAT which they have paid on their qualifying business expenses.
• In the end, VAT is referred to as a consumption tax; thus, the final user is the one who pays for it.

Compared to many European and Latin American countries with VAT rates between 15% and 25%, the Bahamas’ 10% standard rate is relatively low. However, cross-country comparisons should also consider exemptions, reduced rates, and compliance requirements. This enhances the jurisdiction’s appeal for:

• International entrepreneurs
• Multinational corporations
• Offshore structures looking for efficiency

Professional Guidance with Offshore Company Services

Understanding VAT is vital for financial planning, compliance, and cross-border transactions. Offshore Company Services provides comprehensive services in company formation, tax compliance, and corporate structuring in the Bahamas. With expert support, businesses can confidently navigate VAT obligations while taking full advantage of the Bahamas’ pro-business tax environment.

=> Learn more: VAT Tax in the Bahamas