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Almost all products and services imported, bought, and sold in The Bahamas are subject to Value Added Tax (VAT). VAT rate is charged at 12%. However, goods shipped to clients in other countries are not charged with VAT.

A company is allowed to charge VAT only when it is VAT-registered. If it is obliged to be registered for VAT (mandated) and does not register, the company will still be responsible for any VAT (plus interest and penalties) even though it did not charge any. Therefore, it's critical to register as soon as possible (when the threshold is reached). Charging VAT without registering is a severe offense that can result in fines or imprisonment.

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