VAT and Sales Tax in Bahamas

What is the current standard VAT rate in The Bahamas?

The standard rate of Value Added Tax (VAT) in The Bahamas is 10%, applied to most taxable goods and services imported, bought, and sold domestically. This rate has been in force since 1 January 2022, when the government reduced it from the previous 12% rate that had applied since VAT was introduced in January 2015. The Department of Inland Revenue (DIR) administers the tax through its Online Tax Administration (OTA) portal at vat.revenue.gov.bs. [1][2]

Which supplies are zero-rated or carry the reduced 5% rate?

Zero-rating (0% VAT) applies to exports of goods and services to customers outside The Bahamas, as well as to unprepared food sold or imported for retail resale. The zero-rating of unprepared food took effect on 1 April 2026, building on an earlier reduction from 10% to 5% that had applied since April 2025. Covered items include fresh fruits and vegetables, baby food, lunch snacks, frozen foods, and packaged groceries -- everything except prepared or hot meals sold ready-to-eat. International passenger flights are also zero-rated; domestic flights attract the standard 10% rate. [3][4]

A reduced rate of 5% applies to a category of essential non-food items expanded under the September 2025 amendments. The 5% rate now covers medicines and medical supplies, baby and adult diapers, and feminine hygiene products. These items moved from the standard 10% rate effective 1 September 2025 pursuant to the Value Added Tax (Amendment) Act 2025. The April 2026 amendments extended eligibility to all VAT registrants for importation and supply, not only pharmacies and food stores. [3][4][5]

What supplies are exempt from VAT entirely?

Exempt supplies fall outside the VAT system: no VAT is charged on output, and input VAT on related costs cannot be recovered. The main exempt categories under Bahamian VAT law are: residential property rental (long-term lettings), qualifying financial services (banking, insurance, securities intermediation), certain educational services, and certain medical services supplied by licensed practitioners. Suppliers of exempt services do not need to register unless they also make taxable or zero-rated supplies above the registration threshold. [1][6]

What is the registration threshold and how does a business register?

A business whose annual taxable supplies meet or exceed BSD 100,000 within any 12-month period must register for VAT within 14 days of crossing the threshold. Voluntary registration is available for businesses below the threshold that wish to recover input VAT. Certain sectors -- e-commerce operators, hotels, and foreign homeowners offering vacation rentals -- must register irrespective of turnover. [1][7]

Registration steps: (1) Access the OTA portal at vat.revenue.gov.bs and create an account. (2) Obtain a Taxpayer Identification Number (TIN). (3) Complete the online VAT Registration Form and submit required documentation. (4) The DIR reviews the application and issues a VAT registration certificate. Penalties apply for late registration. [7]

How does VAT on real-estate conveyances work?

Transfers of real property in The Bahamas attract VAT at the standard 10% rate on the full consideration paid for the conveyance. A significant procedural requirement introduced under the Conveyancing and Law of Property (Amendment) Act 2025 is the mandatory provisional VAT invoice: parties (buyers, sellers, attorneys, and agents) must request this invoice from the DIR through its online portal before executing the conveyance instrument. The provisional invoice amount may be adjusted when the final instrument is submitted to the DIR for stamping. VAT assessed on a property transaction must be paid within 180 days of the conveyance being executed, and takes precedence over legal and agent fees in payment priority. Commercial property rentals also attract the standard 10% VAT. Timeshare sales are VAT-taxable regardless of sale price. [8][9]

Summary of Bahamian VAT rates by supply type (2026)

Filing obligations: quarterly and monthly returns

Registered VAT businesses file returns through the OTA portal. The default tax period is quarterly (three-month periods) for businesses with annual turnover below BSD 5 million. Businesses exceeding BSD 5 million in annual taxable turnover are placed on a monthly filing cycle. A registrant on a quarterly cycle may voluntarily request monthly filing by writing to the Controller. Returns and payment are due within 21 days of the end of each tax period; large taxpayers classified as such by the DIR have a shortened 14-day deadline. Late filing attracts a penalty of BSD 100 per month, plus interest on outstanding tax. Businesses must maintain accounting records for a minimum of five years. [7]

For a broader overview of how The Bahamas positions itself in the Caribbean tax landscape -- including the absence of income tax and capital-gains tax -- see the The Bahamas country overview. Businesses and individuals with complex VAT positions, particularly those involving real-estate conveyances, cross-border digital services, or mixed exempt-and-taxable supplies, should consult a qualified tax professional registered with the Bahamas Institute of Chartered Accountants (BICA) or a licensed attorney for guidance specific to their circumstances.