Retailers Fearful VAT Cut Could Impact Bottom Line

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NASSAU , BAHAMAS – As government moves to eliminate VAT on unprepared food items, some grocery store retailers are raising concerns about how the change could impact their bottom line.

Economic Affairs Minister Michael Halkitis addressing those concerns following a meeting with industry players. Our Delvardo Emmanuel reported.

With less than two weeks before VAT is removed from unprepared food items, government is working closely with grocery retailers to make sure the change hits shelves without disruption.

On Tuesday, during a national address, Prime Minister Philip Davis announced plans to meet with grocery retailers to address the reduction of value-added tax on uncooked foods, which will take effect on April 1.

Economic Affairs Minister Michael Halkitis confirming that those issues were raised during a Tuesday night meeting with retailers.

Michael Halkitis – Minister, Economic Affairs

“They have some bottom line concerns, but as I have said previously, we are in a situation where cost of living is at the forefront on the minds of many people. If you do a survey, many people around the world look at it as their number one issue. And so to tackle it, it requires government and it requires the private sector. And so if there’s a potential of a little bit of an impact on the bottom line, I think people understand that. That’s one of these situations that we’re in. We’re looking to bring relief, and it’s a shared responsibility.”

Halkitis also noted another area of concern for retailers—going from a reduced VAT rate to zero. He says this requires adjustments in accounting systems.

Michael Halkitis – Minister, Economic Affairs

“There are some back-office administrative accounting procedures that they have to do to properly account. It’s a little different going from five to ten than going from five to zero, where there’s no VAT payable. And so it’s just a few things that they have to do in terms of their accounting and bookkeeping, et cetera. And we assured them that we will work with them to make sure they have the time needed to implement those changes.”

Despite those challenges, Halkitis says both the government and the private sector are committed to making the policy work to bring much-needed relief to Bahamian households.

Michael Halkitis – Minister, Economic Affairs

“We walked away confident that everybody will be ready to make the change, and we agreed to continue discussions so that any administrative difficulties they anticipate can be addressed.
It was a very productive meeting. I think we all walked away believing that the change will take effect and the Bahamian people will feel the benefit of it on April 1.”