Rate Transition Handling
When VAT rates change — such as the April 2026 reforms that moved certain goods between rate categories — CoralLedger Comply applies the correct rate based on each transaction's date and preserves the historical accuracy of all existing records.
What Is a Rate Transition?
A rate transition occurs when a category of goods or services moves from one VAT rate to another on a specific effective date. The April 2026 reforms are a significant example: certain unprepared food items that were previously taxable (at 10% or 5%) became Exempt as of April 1, 2026.
April 2026 Category Changes
| Item Category | Before April 1, 2026 | From April 1, 2026 |
|---|---|---|
| Unprepared / raw food | 10% Standard or 5% Reduced | Exempt |
| Essential grocery staples (breadbasket) | 5% Reduced | Exempt |
| Prepared food / restaurant meals | 10% Standard | 10% Standard (unchanged) |
| Other retail goods | 10% Standard | 10% Standard (unchanged) |
The April 2026 rate changes took effect on April 1, 2026. Transactions dated on or after this date use the new rates; transactions dated before this date retain their original rates.
How Comply Manages the Transition Date
Date-Based Rate Application
Comply uses each transaction's transaction date — not the import date or filing date — to determine the applicable VAT rate. This means:
- A grocery purchase dated March 31, 2026 retains the pre-transition rate (e.g., 5% Reduced).
- The same grocery purchase dated April 1, 2026 is assigned the post-transition rate (Exempt).
You do not need to manually update categorization rules; the system applies the correct rate based on the date you record.
Preservation of Historical Transactions
Existing transactions are never retroactively re-rated. Once a transaction is saved with a rate that was valid on its transaction date, that rate is locked for historical accuracy:
- Immutable historical rates — Past transactions reflect the rate in force at the time of the transaction.
- Audit trail integrity — The audit log records the rate applied and the effective date table used at the time of categorization.
- VAT return accuracy — Returns generated for periods before April 2026 calculate using pre-transition rates; returns for periods on or after April 2026 use post-transition rates.
Categorization Rule Behaviour at Transition
When a rate change takes effect, existing categorization rules (vendor/keyword rules) are updated by Comply to reflect the new rate schedule. The update happens at the system level on the effective date:
| Scenario | Behaviour |
|---|---|
| New transaction after the effective date | New rate applied by transaction date |
| Historical transaction already saved | Rate unchanged; original rate preserved |
| Categorization rule pointing to a changed category | Rule updated to new rate for future transactions |
| Manual category override on a historical transaction | Override preserved; an alert reminds you to confirm accuracy |
If you manually override a category for a transaction dated close to the transition date, Comply will display a Rate Transition Alert asking you to confirm that the transaction date and chosen rate are both correct.
Box 5: Reduced / Essential Goods Classification
What Is Box 5?
Box 5 on the Bahamas VAT return is the line item for Reduced/Essential Goods supplies. It captures supplies taxed at the 5% reduced rate (and, post-April 2026, certain newly exempt essential goods depending on the return period).
Significance Post-April 2026
After April 1, 2026, the goods that previously populated Box 5 as 5%-rated are reclassified as Exempt. This has two practical consequences:
- Box 5 values decrease — Transactions dated on or after April 1, 2026 for these goods no longer contribute to Box 5.
- Exempt supplies increase — The same goods now appear in the Exempt supplies summary instead, which affects your refund eligibility calculation under the 50% rule.
Box 5 in VAT Returns Generated by Comply
| Return Period | Box 5 Contents |
|---|---|
| Periods ending before April 1, 2026 | All 5%-rated reduced/essential goods transactions |
| Periods that span April 1, 2026 | Split: pre-transition transactions at 5%; post-transition transactions as Exempt |
| Periods starting on or after April 1, 2026 | Only 5%-rated items that remain in the reduced category |
When generating a return that spans the April 1, 2026 date, Comply splits the Box 5 calculation so that each transaction is reported at the rate applicable on its transaction date.
Transition Alerts in the UI
Comply surfaces rate transition guidance in several places:
- Transaction list — A banner appears when viewing transactions near the transition date.
- Categorization screen — A tooltip flags items whose category changed on April 1, 2026.
- VAT return preview — A transition summary section shows how many transactions were split across the rate change and what the combined Box 5 impact is.
- Intelligence Dashboard — The period-comparison view highlights the Box 5 shift between pre- and post-transition periods.
Frequently Asked Questions
Do I need to re-categorize transactions I already entered?
No. Transactions entered before the transition date with the correct rate for that date are already accurate. Comply will not change them.
What if I enter a transaction with the wrong rate for its date?
The Rate Accuracy component of your compliance score will flag the mismatch. Correct it by editing the transaction category; Comply will prompt you to confirm the change and log it in the audit trail.
How do I know which of my items are affected by the April 2026 change?
Go to Compliance > Rate Transitions to see a list of vendor/category rules that have been updated and the transactions that fall near the April 1, 2026 date.
Will my refund eligibility change after April 2026?
Possibly. Goods moving from 5%-taxable to Exempt reduce your taxable supplies, which affects the 50% zero-rated threshold for refund eligibility. Review your position in Compliance > Refund Eligibility after the transition date.