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VAT Rates Reference

Current VAT rates under the Bahamas VAT legal framework and 2025 reforms.

Rate Transition Demo​

Category Summary​

CategoryNameApplication
Standard (10%)StandardDefault category for taxable supplies
Reduced (5%)ReducedHygiene products and medications at licensed food stores (narrow scope)
Zero-Rated (0%)Zero-RatedExports and specific supplies
ExemptExemptExcluded from VAT system; includes unprepared food at licensed food stores from April 1, 2026

Standard Rate (10%)​

The default rate applies to most goods and services including:

  • Retail goods
  • Professional services
  • Restaurants and food service
  • Entertainment
  • Construction services
  • Most business services

Reduced Rate (5%)​

Narrow Scope

The 5% reduced rate is limited to a narrow category of items — hygiene products and medications sold at licensed food stores. It is not a general third rate and does not apply to unprepared food (see Exempt Supplies below).

The 5% reduced rate applies to hygiene products and medications sold by licensed food stores only.

Qualifying Items​

  • Hygiene products (soap, toothpaste, sanitary products, etc.)
  • Over-the-counter medications
  • Other eligible health and hygiene items as defined by the Comptroller
Breadbasket Items No Longer at 5%

Prior to April 1, 2026, the 5% rate also covered breadbasket staples (bread, rice, flour, etc.). From April 1, 2026, those items moved to VAT Exempt. See Exempt Supplies.

Requirements​

  • Must be sold by a business with a valid food store license
  • Must be qualifying hygiene or medication items as defined by the Comptroller
  • Regular retail sales only (not food service)
License Required

The 5% rate only applies at licensed food stores.

In current Bahamas food-safety law, food-business registration and oversight sit with the Bahamas Agricultural Health and Food Safety Authority (BAHFSA), not the Ministry of Health. See Bahamas Agricultural Health and Food Safety Authority Act, 2016, s. 4; Food Safety and Quality Act, 2016, ss. 25-27.

Zero-Rated (0%)​

Zero-rated supplies charge 0% VAT but allow input VAT recovery.

Zero-Rated Categories​

  • Exports of goods
  • International transportation services
  • Services to non-residents
  • Inter-island shipping
  • Breadbasket staples (for example, bread, rice, flour, and fresh produce) when sold by non-licensed sellers
  • Certain financial services

Note: Inter-island shipping remains in the Zero-Rated category under Value Added Tax Act, 2014 (as amended by the VAT (Amendment) (No. 2) Act, 2021), s. 9, First Schedule Part I.

Exempt Supplies​

Exempt supplies are outside the VAT system entirely. No VAT is charged and no input VAT can be claimed.

April 2026 — Unprepared Food Moves to Exempt

As of April 1, 2026, unprepared food sold at licensed food stores is VAT Exempt — not zero-rated. Unlike zero-rated supplies, exempt supplies do not entitle the supplier to claim input tax credits on related purchases. Businesses that sell a mix of taxable and exempt supplies must apportion their input VAT accordingly.

Exempt vs Zero-Rated: Key Distinction​

Both Exempt and Zero-Rated supplies result in no VAT being charged to the customer, but they differ critically for the supplier:

ExemptZero-Rated
VAT charged to customerNoNo
Supplier claims input tax creditsNoYes
Affects apportionmentYesNo

Because exempt supplies block input tax credit recovery, a business selling both exempt and taxable supplies must calculate a partial exemption / apportionment to determine how much input VAT it can recover.

Exempt Categories​

  • Financial services (banking, insurance)
  • Educational services
  • Medical and healthcare services
  • Residential rent
  • Certain government services
  • Unprepared food at licensed food stores (from April 1, 2026)

Input VAT Recovery​

Supply TypeVAT ChargedInput Recovery
Standard (10%)YesYes
Reduced (5%)YesYes
Zero-Rated (0%)NoYes
ExemptNoNo

Effective Dates​

Transition Dates

When VAT rates change, CoralLedger Comply applies the correct rate based on the transaction date you enter. Transactions near rate transition dates display applicable rate guidance to help you confirm the correct category.

Next Steps​