The Bahamian VAT system now has four distinct categories - including a critical Exempt classification for unprepared food effective 1 Apr 2026. Getting the classification wrong is not a paperwork mistake - it is a compliance failure. CoralLedger Comply supports practitioner-reviewed classification for every transaction.
Every supply in the Bahamas falls into one of four VAT categories. The challenge for mixed-supply businesses is correctly classifying each product and calculating Input Tax Apportionment every period.
No VAT is charged to the customer. The supplier cannot claim input tax credits on purchases related to exempt supplies.
No VAT is charged to the customer, but the supplier can claim input tax credits on related purchases.
The 5% reduced rate applies to qualifying medical and hygiene items, regardless of seller.
The default rate for all taxable supplies not specifically listed under another category. When in doubt, 10% applies.
Both Exempt and Zero-Rated supplies result in no VAT charged to the customer. The critical difference is input tax recovery: zero-rated suppliers can reclaim input VAT on their purchases; exempt suppliers cannot. A food store selling exempt unprepared food loses the right to recover input VAT on those supplies - which directly affects profitability and requires Input Tax Apportionment.
If your business makes both exempt and taxable supplies, you cannot claim 100% of your Input VAT. The deductible fraction must be recalculated every VAT return period.
Apportionment calculation workflow - Coming SoonThe treatment of the same unprepared food depends on whether the seller qualifies as a food store under the VAT Act.
Qualifying food store: unprepared food is Exempt from 1 April 2026. No VAT is charged, and input VAT on those supplies is not recoverable.
A food store is a business that meets one of the four routes in the VAT Act's definition: a prior-year turnover test, a new-business estimate, a licensed pharmacy, or as prescribed by the Comptroller. Confirm your qualification with the Department of Inland Revenue.
Any other seller: the same unprepared food is charged at the standard rate of 10%.
The VAT Act's definition has four routes for a business to qualify as a food store.
Source: VAT (Amendment) (No. 2) Act, 2025, section 2, definition of "food store".
CoralLedger Comply supports a consistent classification workflow. Every product is classified once during setup, and the configured treatment is applied on every transaction thereafter.
Assign each product a VAT category (Exempt, 0%, 5%, or 10%) during guided setup. CoralLedger Comply records the classification against the product for practitioner review.
Coming Soon - Input tax apportionment is not available in the platform yet; the filing practitioner remains responsible for the workings.
Recorded transactions carry their configured classification for practitioner review. Exempt, zero-rated, reduced-rate, and standard-rate lines are separated from your configured categories.
When the VAT schedule is updated - new exempt items, reduced-rate changes - CoralLedger Comply surfaces the affected products for practitioner review.
Every classification decision is logged with a timestamp and justification. If auditors ask why a product was classified as Exempt, the evidence is available for review.
Prepare a draft return for practitioner review before filing.
Stop guessing which classification applies. CoralLedger Comply helps you classify inventory, applies the VAT treatment you configured on every sale, and generates compliant returns for your review.
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