BREA: INCREASE IN VAT OKAY, GIVE BUYERS TOP NOTCH SERVICE
The leadership of the nation’s largest professional association said today they would ask their clients to swallow a higher Value Added Tax rate on real estate purchases if that increase came with action – an improvement in ease of doing business including speedier application processing.
The somewhat surprise reaction came from the president of the Bahamas Real Estate Association after an urgent electronic caucus of a sample membership and followed within hours of the government’s introduction of the 2021-2022 budget today raising the VAT on real estate sales from 10% to 12% on sales of $2 million or more. Sale of properties for $100,000 or less will not be touched. That VAT rate will remain at 2.5%.
“The Bahamas Real Estate Association (BREA) is more than 700-memberrs strong and as a professional association, we understand the government’s need to identify additional revenue sources,” said BREA President Christine Wallace-Whitfield. “There were concerns among some of our members when the rate increase was originally thought to be on properties selling for $1 million and up as that net would have captured a lot of Bahamian homeowners who are not high net worth individuals, but when the benchmark was lifted to $2 million, we discussed it and agreed that what the individual buying a $2 million property really wants is better service. They don’t want their application to linger for months in a government office or their papers to be shuffled around. They want to be treated with respect.”
Among the most frequent complaints, said Wallace-Whitfield – lack of attention to applications for investment approval and what she called “little sense of urgency” by most government departments.
“The individual spending $2 million up to ten times that is accustomed to good service. The few extra dollars on the closing cost will hurt a little, but can be more than compensated for through speedier closings and more respect for the individual,” she said.
“These are people who are coming into The Bahamas with money to spend, helping to boost the economy, and they become very discouraged, sometimes to the point of disbelief, that it can take four to six months to close when back home in the US or Canada it would have been a matter of days,” she said. “And this goes for Bahamians as well. We know these have been extraordinary times and we will support the government in the VAT increase but we are serious about expecting greater respect for buyers through more efficient service and ease of doing business and that includes being creative. If you are looking at top dollar for the public purse, what concessions will you provide to encourage more commerce? Or is there a trade-off with reduced property tax at a later time?”