January 2020 | By Chelon Carr-Newbold
Special Tax Relief for Abaco and Grand Bahama
To encourage the rebuilding effort in Abaco, Grand Bahama and the surrounding Cays (the “Zone”) after Hurricane Dorian, tax relief is now available under the Disaster Reconstruction Authority (Special Economic Recovery Zone) (Relief) Order, 2019.
Real Property Tax
Any improved property located within the Zone that was either partially or completely destroyed as a result of the hurricane will be exempt from real property tax in 2020, if the property is rebuilt or otherwise habitable by 1st October, 2020.
If the property is not rebuilt or otherwise habitable by such date, there will be no tax break and the taxes owing in 2020 will be added to the tax bill in 2021.
It remains to be confirmed by the Department of Inland Revenue what evidence will be required to show that the property has been rebuilt or is habitable but we expect that these requirements will be clarified in due course.
Sale of Real Property
From 4th December, 2019 to 30th June, 2020, a purchaser of real property will be eligible to receive a discount on VAT on the conveyance at the rates shown below if he can demonstrate:
(a) that the property is fully habitable; or
(b) if the property is not fully habitable, he has plans to make repairs and can start the repairs within 75 days of the closing; or
(c) if the property is undeveloped, he has plans showing that he intends to undertake material commercial or residential development of the property
If the repairs or construction is not commenced within 75 days of the closing of the sale, the tax becomes payable.
| PURCHASE PRICE | RATE OF VAT | DISCOUNT |
| Up to $100,000 | 2.5% | 50% |
| $100,001 – $250,000 | 10% | 35% |
| $250,001 – $500,000 | 10% | 20% |
| $500,001 – $1,000,000 | 10% | 15% |
Business Licence
Relief from business licence tax is available to businesses operating within the Zone for a period of one year beginning on 1st January, 2020, if the business increases its staff by 31st August, 2020 to 50% of the number of persons that were previously employed on 31st August, 2019.
A business located and operating solely within the Zone will be exempt from business licence tax.
For a branch or subsidiary of a business operating within the Zone, the business licence tax associated with the turnover derived from the branch or subsidiary will be deducted from the aggregate business licence tax of the business or group.
Import Duties
From 4th December, 2019 to 30th June, 2020, subject to conditions stipulated by the Ministry of Finance, the importation of certain of food items, medical, household and building supplies (as listed below) to the Zone will be exempt from VAT and import duties. Likewise, the local wholesale or retail sale of such goods and the retail sale of fuel will be exempt from VAT.
GOODS
Unprepared Food of all types, including packaged and processed foods
Water
Fruit & Vegetable Juice
Personal Hygiene Products Medicine and Medical Supplies
Clothes, Footwear, Hats, Belts, Socks, Stockings, Gloves, Scarves
Cleaning Supplies
Beds & Bedding Materials
Hardware Supplies
Building Materials
Landscaping Supplies
Pest Control Supplies
Electrical fixtures and materials
Electrical Generators
Farming Equipment & Supplies
Fishing Equipment & Supplies
Replacement Boats
Replacement Boat Engines
Manufacturing Equipment
Cots
Protective & Safety Gear
Household furniture, furnishings and appliances
Solar Panels
Mosquito netting
Plumbing fixtures and materials
Office Supplies & Equipment
Tents
Air Conditioning Units
Replacement Motor Vehicles
Replacement Golf Carts
Replacement Motor Cycles
This article has also been published with International Law Office: Special tax relief for Abaco and Grand Bahama