VAT Rates Reference
Current VAT rates under the Bahamas VAT legal framework and the staged 2025-2026 reforms.
Category Summary
| Category | Name | Application |
|---|---|---|
| Standard (10%) | Standard | Default category for taxable supplies |
| Reduced (5%) | Reduced | Hygiene products and medications at licensed food stores (narrow scope) |
| Zero-Rated (0%) | Zero-Rated | Exports and specific supplies |
| Exempt | Exempt | Excluded from VAT system; includes unprepared food at licensed food stores from April 1, 2026 |
Standard Rate (10%)
The default rate applies to most goods and services including:
- Retail goods
- Professional services
- Restaurants and food service
- Entertainment
- Construction services
- Most business services
Reduced Rate (5%)
The 5% reduced rate is limited to a narrow category of items — hygiene products and medications sold at licensed food stores. It is not a general third rate and does not apply to unprepared food (see Exempt Supplies below).
The 5% reduced rate applies to hygiene products and medications sold by licensed food stores only.
Qualifying Items
- Hygiene products (soap, toothpaste, sanitary products, etc.)
- Over-the-counter medications
- Other eligible health and hygiene items as defined by the Comptroller
Prior to April 1, 2026, the 5% rate also covered breadbasket staples (bread, rice, flour, etc.). From April 1, 2026, those items moved to VAT Exempt. See Exempt Supplies.
Requirements
- Must be sold by a business with a valid food store license
- Must be qualifying hygiene or medication items as defined by the Comptroller
- Regular retail sales only (not food service)
The 5% rate only applies at licensed food stores.
In current Bahamas food-safety law, food-business registration and oversight sit with the Bahamas Agricultural Health and Food Safety Authority (BAHFSA), not the Ministry of Health. See Bahamas Agricultural Health and Food Safety Authority Act, 2016, s. 4; Food Safety and Quality Act, 2016, ss. 25-27.
Zero-Rated (0%)
Zero-rated supplies charge 0% VAT but allow input VAT recovery.
Zero-Rated Categories
- Exports of goods
- International transportation services
- Services to non-residents
- Inter-island shipping
- Breadbasket staples (for example, bread, rice, flour, and fresh produce) when sold by non-licensed sellers
- Certain financial services
Note: Inter-island shipping remains in the Zero-Rated category under Value Added Tax Act, 2014 (as amended by the VAT (Amendment) (No. 2) Act, 2021), s. 9, First Schedule Part I.
Exempt Supplies
Exempt supplies are outside the VAT system entirely. No VAT is charged and no input VAT can be claimed.
As of April 1, 2026, unprepared food sold at licensed food stores is VAT Exempt — not zero-rated. Unlike zero-rated supplies, exempt supplies do not entitle the supplier to claim input tax credits on related purchases. Businesses that sell a mix of taxable and exempt supplies must apportion their input VAT accordingly.
Exempt vs Zero-Rated: Key Distinction
Both Exempt and Zero-Rated supplies result in no VAT being charged to the customer, but they differ critically for the supplier:
| Exempt | Zero-Rated | |
|---|---|---|
| VAT charged to customer | No | No |
| Supplier claims input tax credits | No | Yes |
| Affects apportionment | Yes | No |
Because exempt supplies block input tax credit recovery, a business selling both exempt and taxable supplies must calculate a partial exemption / apportionment to determine how much input VAT it can recover.
Exempt Categories
- Financial services (banking, insurance)
- Educational services
- Medical and healthcare services
- Residential rent
- Certain government services
- Unprepared food at licensed food stores (from April 1, 2026)
Input VAT Recovery
| Supply Type | VAT Charged | Input Recovery |
|---|---|---|
| Standard (10%) | Yes | Yes |
| Reduced (5%) | Yes | Yes |
| Zero-Rated (0%) | No | Yes |
| Exempt | No | No |
Effective Dates
- Original VAT regime start: January 1, 2015 — Value Added Tax Act, 2014
- Rate Increase to 12%: July 1, 2018
- Rate Reduction to 10%: January 1, 2022
- 2024 VAT amendment enacted: July 1, 2024
- Food store qualification rules effective: April 1, 2025
- Multi-rate framework fully effective: July 1, 2025
- Reduced-rate narrowing (hygiene/medical only) effective: September 1, 2025
- April 2026 food exemption: April 1, 2026 — unprepared food at licensed food stores moves to Exempt per VAT (Amendment) Act 2026 (No. 4), s. 3, Second Schedule Part I item (19)
Effective Dates Verbatim Tier Log
| Citation | Tier | Behavior confirmed | Source | Verbatim? |
|---|---|---|---|---|
| Value Added Tax Act, 2014 (as amended by the VAT (Amendment) Act, 2018), s. 10 | NEUTRAL (citation stripped) | Rate increase date retained on page pending source recovery | Gazetted instrument not locatable in this repository snapshot | No |
| VAT (Amendment) (No. 2) Act, 2021 | NEUTRAL (citation stripped) | Rate reduction date retained on page pending source recovery | Gazetted instrument not locatable in this repository snapshot | No |
| VAT (Amendment) Act, 2024 | NEUTRAL (citation stripped) | 2024 milestone date retained on page pending source recovery | Gazetted instrument not locatable in this repository snapshot | No |
| VAT (Amendment) Act, 2025 | NEUTRAL (citation stripped) | April 2025 milestone date retained on page pending source recovery | Gazetted instrument not locatable in this repository snapshot | No |
| VAT (Amendment) (No. 2) Act, 2025 | NEUTRAL (citation stripped) | July 2025 milestone date retained on page pending source recovery | Gazetted instrument not locatable in this repository snapshot | No |
| VAT (Amendment) Act, 2025 | NEUTRAL (citation stripped) | September 2025 milestone date retained on page pending source recovery | Gazetted instrument not locatable in this repository snapshot | No |
| VAT (Amendment) Act 2026 (No. 4), s. 3, Second Schedule Part I item (19) | PRIMARY | April 2026 food→Exempt treatment | Cass 2026-06-06 decision record (companion PR #214 context) | Yes |
The 2025 reforms did not commence on a single date. CoralLedger Comply applies the correct rate based on the transaction date you enter, using the staged April 1, 2025, July 1, 2025, September 1, 2025, and April 1, 2026 commencement points. Transactions near rate transition dates display applicable rate guidance to help you confirm the correct category.