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5% vs 10% vs 0%:
Which Rate Applies?

A visual guide to Bahamas VAT rate selection — accurate per the VAT Act 2025 Amendment, Fourth Schedule.

0% Zero-rated basics

5% Reduced (Sep 2025)

10% Standard rate

Visual Example

The Rotisserie Paradox

Same animal. Same store. Two completely different VAT rates. Here's why.

0% VAT

Raw Whole Chicken

Unprocessed. Unprepared. Sold in a licensed grocery store.

It is food

It is unprepared / unprocessed

Seller is a licensed food store

Result: Zero-Rated (0% VAT)

10% VAT

Hot Rotisserie Chicken

Cooked. Prepared. Ready to eat. Same store — different outcome.

It is food

It is prepared / cooked

Preparation status overrides grocery status

Result: Standard Rate (10% VAT)

The key insight

VAT rate is determined by the nature of the supply at point of sale, not by the underlying product category alone. Preparation, packaging, or service can shift a zero-rated item to the 10% standard rate.

Flowchart

Category Decision Tree

Use this flowchart to determine the correct VAT rate for any supply.

What are you selling?

Is it food or a food product?

Yes No

Is it unprepared & unprocessed?

Yes

Licensed food store?

Yes

Zero-rated

10%

Standard

10%

Prepared = standard

Is it qualifying hygiene or medical supply?

(effective Sep 2025)

Yes

Reduced

10%

Standard

Zero-rated (0%)

Reduced rate (5%) — from Sep 2025

Standard rate (10%)

VAT Act 2025 Amendment · Fourth Schedule

New 5% Rate: Effective September 2025

The 2025 VAT Amendment introduces a 5% reduced rate for essential hygiene and medical products, replacing the previous 10% standard rate for these categories.

Hygiene Products

From 10% → 5% effective September 2025

Diapers / Nappies

All sizes, disposable and reusable

5%
Feminine Hygiene Products

Pads, tampons, menstrual cups

5%
Adult Incontinence Products

Briefs, pads, protective underwear

5%

Medical Supplies

From 10% → 5% effective September 2025

Prescription (Rx) Drugs

Licensed pharmaceuticals dispensed on prescription

5%
Over-the-Counter (OTC) Medications

Pain relief, cold medicine, antacids, etc.

5%
Medical Devices

Glucose monitors, blood pressure cuffs, nebulizers

5%

Important: Rate Change Timeline

Before September 2025, hygiene and medical products are taxed at the standard 10% rate. The 5% reduced rate only applies from the effective date. Ensure your POS and accounting systems are updated before the changeover.

Summary

Quick Reference Table

All three rates at a glance — per the VAT Act 2025 Amendment.

Category	Examples	VAT Rate	Condition
Unprocessed food staples	Raw chicken, fresh produce, flour, rice, canned goods	0%	Sold unprepared by a licensed food store
Prepared / cooked food	Rotisserie chicken, hot meals, restaurant food	10%	Any preparation or cooking = standard rate
Food from non-licensed seller	Street food, food sold by unlicensed vendors	10%	Seller must hold a food store licence
Hygiene products	Diapers, feminine hygiene, adult incontinence	5%	Effective September 2025 (was 10%)
Medical supplies	Rx drugs, OTC medications, medical devices	5%	Effective September 2025 (was 10%)
All other taxable supplies	Electronics, clothing, services, software	10%	Default standard rate

Source: Bahamas VAT Act 2025 Amendment, Fourth Schedule. Always verify with the Department of Inland Revenue for the most current schedules.

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