By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Department of Inland Revenue will launch a crackdown on non-compliant vacation rental properties early in 2026 as registration remains below its expectations, it was revealed yesterday.

Shunda Strachan, the Department of Inland Revenue's controller, said increased enforcement against vacation rental owners who have not registered their properties with the tax authority will begin “early in the New Year”.

Speaking at a seminar for the Government’s large taxpayers, Ms Strachan said that although more vacation rental owners are registering their properties, many still have not complied. As a result, the Department of Inland Revenue will now begin enforcement actions with a focus on individuals advertising vacation rentals that are not properly registered.

“Vacation rentals, the registration is improving, but there's still room for improvement. So we're about to engage enforcement activities on those that we see advertising but that haven't come forward,” said Ms Strachan. 

“We have given a grace period to allow businesses or those entities that have vacation properties to come forward. But, unfortunately, the registration is not as high as we think it should be, and so we will begin enforcement very early in the New Year.”

Mrs Strachan also warned that VAT must be paid based on where a service is provided, and if an audit shows a taxpayer has not paid due taxes, the Government will issue an assessment and require payment.

Accountants have complained that the Department of Inland Revenue is demanding VAT for services rendered to International Business Companies (IBCs), other corporate entities and clients who conduct 100 percent of their business activities outside The Bahamas, but Ms Strachan noted that if a service is provided in this nation then VAT is due.

“Value-Added Tax is paid depending on where the service is obtained. So if those services were obtained in The Bahamas, the taxes would be due. So if it is that we have conducted audits on those taxpayers and they haven't paid the required amount of taxes, then we will definitely issue an assessment and expect that the taxes be paid,” said Mrs Strachan.

“We will give a grace period and allow various means for them to pay if they need payment arrangements or what have you. But the taxes are due, and they do need to be paid.”

Mrs Strachan said that for a business to reclaim, and net off, VAT on its inputs against the taxes paid by consumers, invoices from suppliers must clearly show the Tax Identification Number (TIN) for all parties. 

Some business owners are complaining about invoices being disallowed due to TIN and other errors, leaving them unable to reclaim input VAT, but Ms Strachan maintained that the policy is not new as it is already stipulated in the VAT Act and the Department is simply enforcing what the law requires.

“The VAT legislation speaks to how VAT invoices should be issued, and that really helps with compliance. In order for us to accept an invoice, for you to claim your input, it has to be clearly laid out. The number one is the VAT invoice. Your TIN has to be clearly on it. So this is not new. This is in the VAT legislation,” said Mrs Strachan

She added that the Department of Inland Revenue has met most of its VAT collection targets so far, indicating that revenue is performing as expected. “VAT collections are on target so far. We have met most of our targets in relation to collections of Value-Added Tax,” Mrs Strachan added.