“Countries around the world have been working to establish international rules for taxation in the digital and shared economy. The big question has been, who should have taxing rights over services and goods ordered from one country and delivered to another country? The generally agreed position is that the tax is due to the state in which the good or service is consumed,” said K. Peter Turnquest, Deputy Prime Minister and Minister of Finance.
“In the case of Facebook, and other digital providers like Airbnb, they are required by law to collect VAT and remit it to the government. Why should a foreign state earn tax revenue on activities taking place in The Bahamas?” said Minister Turnquest.
In The Bahamas, tax laws require all services consumed inside the country to be subject to VAT provided the vendor meets the minimum $100,000 per annum threshold for sales inside the country. That includes advertising services no matter where the company may be physically located.
This has been the case since inception; however, the team at the Department of Inland Revenue has been working hard to ensure the laws are being uniformly enforced consistent with the prevailing international standard where VAT or other sales taxes are applied.
This move now puts Facebook and other online operators on even footing with Bahamian companies offering marketing services inside the Bahamas. These companies must charge VAT on advertising services.
“If we do not uniformly enforce the law we are putting Bahamian companies at a competitive disadvantage. Local newspapers and televisions, for example, have to charge VAT on advertising services. We are levelling the playing field, while doing all we can to standardize revenue collection,” said Minister Turnquest.