Key Client Take Away: Submit your application to the Government for pre-approval before 31 March 2022 to benefit from the tax concessions for importation of Specified Goods into a special economic recovery zone (“SERZ”) in 2022.
What are the SERZ provisions?
The Disaster Reconstruction Authority (Special Economic Recovery Zone) (Relief) Order, 2022 (the “2022 SERZ Order”) extended certain tax concessions from 1 January 2022 to 1 December 2022 (the “Extension Period”).
Persons who wish to purchase Specified Goods (as defined below) or import them directly into a SERZ and take advantage of the tax concessions must make an application by 31 March 2022 to be pre-approved. Once approval is granted, it is valid until 1 December 2022.
To assist with ongoing rebuilding efforts in a SERZ, the 2022 SERZ Order continues to provide for the importation of specific construction related materials into each SERZ to be VAT-free and Duty-free. The construction related materials specified in the 2022 SERZ Order (the “Specified Goods”) are:
- Household Furniture
- Furnishings & Appliances
- Hardware Supplies
- Building Materials
- Electrical Fixtures and Materials
- Plumbing Fixtures and Materials
Approved Specified Goods will be exempted from certain customs duties, VAT and fees.
What is the application process?
- Complete a Consolidated Tax Relief Form (Note: Although the Form indicates that it is to be used for goods purchased in 2021, it can be used for the pre-approval applications in 2022);
- The completed Form should be accompanied by the following supporting documents:
- For Individuals:
- Bahamians – Copy of Valid Government-issued ID (i.e., Passport, Voter’s card, NIB Card or Driver’s License); and
- Non-Bahamians – Copy of Passport and evidence of property ownership in a SERZ or planned eligible activity on the Island
- Valid Government-issued ID of the Owner (i.e., Passport, Voter’s card, NIB Card or Driver’s License)
- Copy of latest Business License
- For Individuals:
It is not necessary to include invoices for Specified Goods for pre-approval applications.
- Submit the completed Form and supporting documents to the Department of Inland Revenue or the Ministry of Finance for review and processing:
Additional tax concessions provided by the 2022 SERZ Order
Construction services: Construction services that were invoiced by the registrant supplier by 31st December, 2021 and are paid in full by the recipient by the 31st March, 2022 are eligible to be VAT-free.
Building Permits: The fees payable for a building permit shall be exempted during the Extension Period, for Bahamian owned buildings that (a) do not exceed 900 square feet, and (b) are built for residential use.
Sales of Real Property:
- Up to 31 March 2022, the sale of real property within a SERZ, where the purchaser is a Bahamian and the value of the property does not exceed $250,000.00, is VAT-free.
- For the duration of the Extension Period, the sale of real property within a SERZ: (a) where the value is $100,000.00 or less, shall be entitled to a 50% VAT discount; and (b) where the value exceeds $100,000 but does not exceed $250,000, shall be entitled to a 35% VAT discount. All discounts are subject to Government approval.