Value Added Tax Increase
Frequently Asked Questions
- What is ‘VAT’?
VAT (Value Added Tax) is a consumption tax, charged on most goods and services bought and sold for use or consumption in The Bahamas. VAT is required to be charged on taxable products or services by VAT-registered businesses on the sale of such products or services to other businesses or to consumers. VAT is collected by the VAT-registered business on behalf of and is remitted to the Government. The VAT rate has been set to increase to 12% from 7.5%, effective July 1, 2018.
- Is Colina a VAT‐registered business?
Yes. Colina Insurance Limited (Colina) is a VAT registrant. Copies of Colina’s VAT certificate are on display at all of Colina’s locations. As a registrant, Colina is required to ensure that its Tax Identification Number (TIN) is clearly displayed on invoices, billings and annual statements to its clients, where applicable.
- Will I be expected to pay 12% VAT on my individual SHAPE policy?
Yes, effective July 1, 2018, all medical insurance premiums are subject to 12% VAT. This new rate will replace the of 7.5% to your Individual SHAPE premiums beginning July 1, 2018.
- Will I be able to see the 12% VAT charged on my individual SHAPE premiums? Will I receive an annual statement summarizing VAT charges against my premiums?
Yes. All Individual SHAPE clients will receive an annual statement on their policy anniversary renewal date which will summarize all payment transactions during the period. The annual statement will serve as your official VAT receipt and will clearly indicate the VAT charged during the period as a separate amount from your individual medical premium.
- If I have paid my premiums in advance, prior to July 1, 2018, will the 12% VAT be charged against the advance premiums?
Effective July 1, 2018, the new VAT rate of 12% will automatically be charged on individual medical premiums as they become due on a monthly basis. In order to keep your premiums current and your policy in force, you will be required to ensure that the VAT inclusive premiums are fully paid.
- How and when will my claim be affected by the new VAT rate of 12%?
Medical service providers who met the VAT registration requirements are required to charge 12% VAT on medical claims incurred as of July 1, 2018.
- Will 12% VAT be charged against my out-of-pocket expenses?
Once the medical service provider is a VAT registrant, any medical services provided would be subject to VAT. As an insured, you would be responsible for the VAT on your corresponding share of the claim. This means that any co-payments, deductibles and co-insurance amounts that you are required to pay under your medical insurance plan will have corresponding VAT charges that you will be required to remit to the medical insurance provider. It is important to note, however, that any VAT on the portion of the claim that is covered by your insurance plan is not your responsibility and can be remitted to Colina as part of your insurance claim.
- Will the VAT increase affect my life-time maximum (LTM)?
No. VAT does not affect the life-time maximum associated with your individual medical policy. Costs contributing to any accumulators on your policy and LTMs will continue to be on a VAT-exclusive basis.
- Are medicines VAT-exempt?
All medication (prescription and over-the-counter) will be VAT exempt effective August 1, 2018. Medication will be charged at the 12% VAT rate from July 1, 2018 to July 31, 2018.