The Bahamas has expanded a tax free shopping scheme for tourists in order to remain competitive after the Caribbean island-state introduced VAT at the rate of 7.5% last year.

Cruise travellers, in particular, are able to choose from a number of Caribbean islands for duty free and travel retail shopping so the VAT addition was a gamble for the Bahamian government.

However, a deal struck between the country’s VAT and customs departments, and Switzerland-based tax refund specialist, Global Blue, has meant that over 60% of eligible Bahamian merchants are now signed up to give shoppers instant refunds.

Michael Halkitis, Bahamian Minister of State for Finance, says: “Following the introduction of VAT, we needed to ensure that the Bahamas continued to be seen as a competitive shopping destination. The new system has made tax free shopping easy and simple for retailers and the customs department – and therefore more available and accessible for tourists.”

REFUNDS AT POINT OF SALE

At retailer, Diamonds International Bahamas, which runs five stores, Ido Elkarat, Head of Operation, adds: “The new system is running very smoothly now and we are already seeing the benefit of offering tax free shopping to tourists.”

The system introduces a standardised electronic platform to the tax refund process so that retailers can sell a range of products to tourists net of VAT. The purchases are recorded in standard format by retailers and then monitored electronically by the Customs Department.

Global Blue plans to double its current investment in marketing and promotion over the coming year to further support the scheme.

Shoppers eligible for VAT-free purchases must not be Bahamian residents or worked in the Bahamas in the past six months and must be departing within 45 days. The minimum purchase amount is $25.