National Address: Prime Minister Announces Five Percent Cut in VAT on Food Items

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NASSAU, BAHAMAS – In the next three months, consumers will see a 5% cut in Value-Added Tax on some grocery store items.

The announcement came during a national address from Prime Minister Philip Davis Wednesady night.

Davis insists his government is looking for ways to reduce the high cost of living for Bahamians.

“I am pleased to announce a 50% reduction in the VAT rate on all food sold in food stores. Beginning April 1st the rate will be cut in half from 10% to 5%,” Prime Minister Davis said.

According to Davis, the hope is that the value-added tax reduction will assist in cutting the burden of grocery costs.

The 5% rate will apply to all food in the food stores, including fresh fruits and vegetables, baby food, lunch, snacks, and frozen food. On the flip side, it will not apply to prepared food in the store’s deli.

The rate reduction will also apply to the importation of the items mentioned.

“The effective date is April 1st, in order to give merchants and food stores time to make the necessary adjustments,” the prime minister said.

“Let me make it clear, VAT is not the case if the high prices of food, but for those with the tightest disposable income will make a difference. This reduction will not impact our fiscal targets for this year.”

This will be the second time the Davis-led government reduced the VAT rate. In 2022, the government reduced VAT from 12% to 10%, but added VAT to items that were previously VAT free.

The prime minister referenced recommendations to increase vat from 12% to 15% as we have the lowest rate in the region.

It’s a decision he says the government shot down.

A more stable economy, according to Davis, made reducing the VAT rate easier. He also said the biggest reason for the high cost of living is the lack of competition in The Bahamas.