By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian realtors yesterday voiced fears they are being placed "on the hook for something we have no control over" in the Government's crackdown on suspected property sales VAT evasion.

Ryan Knowles, founder and chief executive of Maison Bahamas, told Tribune Business that the compliance burden should instead be placed on attorneys after the Davis administration unveiled VAT Act reforms that expose realtors to a fine equal to 3 percent of the purchase price if they fail to declare a "newly-constructed dwelling's" sale within 30 days of closing.

Voicing hope that the proposed changes will be "revisited", he argued that it was more appropriate to impose the reporting duties on Bahamian attorneys as they are the professionals that draft the conveyancing documents, handle the purchase price exchange and ensure all real estate transactions close by executing the deeds and lodging them for recording in the Registry of Records.

The VAT (Amendment) Bill 2025, which was tabled in the House of Assembly amid the legislative package accompanying the 2025-2026 Budget, seeks to impose a further compliance, reporting and regulatory burden on Bahamian realtors in a bid to ensure the Public Treasury collects all due tax on the purchase of newly-built homes or land sold for such construction purposes.

It seeks to create a new section in the VAT Act, section 47C, headlined: "Requirement to notify [VAT] comptroller of sale of newly-constructed dwelling'. This disclosure requirement applies not only to actual "dwellings" but "vacant real property intended to be used for the construction of a dwelling".

This disclosure must be filed within 30 days of a sales agreement, or transaction, closing. "Where a real estate agent has been hired in respect of a sale, the real estate agent shall file the prescribed declaration with the Comptroller within 30 days of the date of closing," the proposed reforms state.

"Where a real estate agent fails to file the prescribed declaration, the real estate agent shall be jointly and severally liable with the person who sold the dwelling to a penalty equal to 3 percent of the amount paid for the dwelling or vacant land." That 3 percent could equal $30,000 on a newly-built home, rising to $300,000 if the "dwelling" is worth $10m.

To ensure there is no room for doubt, the Bill's 'objects and reasons' section states: "Clause nine of the Bill requires declaration of newly-constructed dwelling homes to be submitted to the Comptroller by a real estate agent hired in respect of the sale.

"The real estate agent is required to file the prescribed declaration within 30 days of the date of closing or risk joint and several liability with the seller to a penalty equal to 3 percent of the amount paid for the dwelling or vacant land."

Realtors were yesterday caught by surprise, and taken aback, by the Government's move. Carla Sweeting, the Bahamas Real Estate Association's (BREA) president, who was attending the Bahamas Business and Investment Forum in New York where Prime Minister Philip Davis KC was the keynote speaker, initially said "this has to be a typo" and added that she would look into the matter.

And Mike Lightbourn, Coldwell Banker Lightbourn Realty's president, described the proposed new VAT Act section as "unbelievable". He added: "How do we know someone is going to build? It's just more paperwork and utter confusion."

Meanwhile Mr Knowles, the Maison Bahamas chief, told Tribune Business: "It really should be the attorney who is responsible for that [the declaration]. Ultimately, in our system, the attorneys are the ones that complete the documents, and ensure all the document adjustments get done properly, and are executed, signed and they lodge the conveyances for recording.

"On the face of it, it would seem to me that the attorneys would be the appropriate person in that scenario. They are the ones handling the paperwork, lodging the documents to be recorded in the Registry of Records. It's not making sense to me. I don't know what mechanism they're proposing to notify the VAT comptroller.

"It seems to be well-intentioned, and I understand the intent behind it, but I don't know how that would work in practice. The realtors are the ones that get the deal together, and we help to move it forward to closing on the property, but the paperwork is handled by the legal profession. They draft the conveyance, make sure it's executed and it goes for recording. It doesn't really pass through us at all."

Suggesting that the Government is imposing an extra compliance burden on the wrong profession, Mr Knowles added: "Maybe more thought needs to go into that. It may be well-intentioned, but in practice I can see this becoming a real issue.

"You may have a situation where the transaction is closed and the realtor is not notified. It's nothing unusual but you never know. The attorneys, they're the ones dealing with it in real time, and as realtors we get notified after the fact. It's out of our hands at a certain point.

"It's good that the Government wants to be progressive and improve the legislation. That's a good thing. But, in this particular circumstance, they may need to revisit that because it's going to be a challenge in practice to execute for all concerned," Mr Knowles continued.

"It's good to have an idea, but what are the implications? You are potentially going to have realtors on the hook for something they have no control over. I'm sure it's going to be looked at and, hopefully, amended as needed." He agreed that "the devil is in the details" when it comes to the Government's annual Budget.

Mario Carey, principal of MCR Better Homes and Gardens Real Estate Bahamas, echoed Mr Knowles' concerns in telling Tribune Business: "I don't know how we would be responsible for what people do after they buy a property. Would they not be able to trace that through a building permit number? Why would it be for the realtors?

"We don't handle any money. The only thing we do is negotiate the deal. We don't handle anything else.... The question is how are they putting that burden on the real estate community. It's crazy. If I sell you a lot and, three months down the road, you hire someone to build something on it, what does that mean? 

"It doesn't make any sense. You need timelines, you need relationships. I don't know what all that means. There's too much room for interpretation. Why would they not go after Town Planning or Building Control who issued the permit? It's too much," he added.

"It just doesn't make any sense. We're not in the construction business, we're not in the legal business. We're in the sales business. The attorney drafts the contract; a realtor doesn't draft the contract. If I sell a lot in a location where there's no compulsion, requirement or timeline to build on a lot, how do we monitor that? It's too much, too vague. It's sad, unfortunate."

Prime Minister Philip Davis KC, in his Budget address, asserted that the Government believes it is not collecting its fair share, and there is too much VAT due and outstanding, from the sliding rate scale that is levied on property sales. He pledged that further measures would be unveiled to address this, but did not specify what they would be.

The Government had collected around $163.5m in real estate-related VAT during the nine months to end-March 2025, having forecast that it would receive more than $294.3m for the full 2024-2025 fiscal year. The near-$131m gap between them during the fiscal year's final quarter is unlikely to be completely bridged, with the Government on pace to collect around $218m.

As a result, it appears to have adjusted the 2025-2026 real estate-related VAT target downwards to around $237m.