Deputy Prime Minister and Minister of Tourism, Investments and Aviation Chester Cooper said he intends to recommend to Cabinet that value-added tax (VAT) be levied on vacation home rentals. He has already charged the Hotel Licensing Department with developing the framework to better regulate the booming segment of the tourism sector.
It’s a policy former Prime Minister Dr. Hubert Minnis also said would be implemented during the 2020/2021 annual budget communication.
During the month of September, The Bahamas recorded its highest number of stopover visitors since borders reopened fully, clocking in just under 190,000 visitors. The latest data from Airbnb analytics company AirDNA showed a continued improvement in the vacation rental market in September compared to the same period in 2020, with total room nights sold more than doubling to 62,339 from 22,292. Cooper said more visitors means vacation rentals will continue to see an uptick.
“To that end, it is the intention of the Davis-Cooper administration to more closely monitor and regulate vacation rentals. We plan to have registration and inspections of vacation rental properties. I have already asked hotel licensing to build out the enabling framework for this. While it will be a Cabinet-level decision, I will recommend that VAT be required on the full price of vacation rentals and not just the fee. As it stands, hotels pay taxes and vacation rental homes, which frankly are often owned by residents whom we welcome but don’t live here full-time, are competing with hotels, sometimes with the benefits of the government’s marketing and infrastructure spend, but not paying back into the treasury,” he said in the House of Assembly on Monday.
“We are also planning to regulate activities like car rentals, boat rentals and immigration on matters reserved for Bahamians. We plan to monitor and enforce this, particularly in the Family Islands. We welcome our friends from different countries, but fair is fair.
“Yes, we must render to Caesar what is due to Caesar. In the same vein, we will also look to see how we can benefit more from charter and cruise businesses in the first instance by collecting the existing fees and, secondly, reviewing the competitiveness and fairness of the fee scales. We are mindful that these charters are using our natural environment, our natural resources for significant profits. We must get our fair share.”
During his budget communication in May, Minnis said his administration would amend the current law to clarify that all vacation home marketplaces, such as Airbnb and VRBO (Vacation Rentals By Owner), are required to pay VAT on rentals and commissions.
He estimated the government would stand to earn an estimated $31 million in revenue from this change.
Following amendments to the Value Added Tax Act in 2019, vacation rental marketplaces such as Airbnb began to charge VAT on guest service fees on behalf of host property owners and remit those funds to the government. They interpreted the legislation as being only applicable to the commissions paid out.
According to Airbnb, most guests pay a service fee that is under 14.2 percent of the booking subtotal.
The post DPM to recommend moving forward with VAT on vacation rentals appeared first on The Nassau Guardian.
source https://thenassauguardian.com/dpm-to-recommend-moving-forward-with-vat-on-vacation-rentals/
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