As a taxpayer in The Bahamas, do you know what to do if you believe you are
unfairly assessed?

Bahamian tax laws (Value Added Tax “VAT”, Business License, Stamp, Real Property, etc.) all provide appeal mechanisms for when you disagree with an assessment.  Each statute provides for the ability to object by giving notice in writing within a specific time period.  The current timelines are as follows:

• Value Added Tax Act: thirty (30) calendar days after the date of service of the notice of the decision on such person;
• Business License Act: twenty-one (21) days after the receipt of the notice of the assessment;
• Real Property Tax Act: thirty (30) days after the date on which the notice of assessment is deemed to have been served; 
• Stamp Act: twenty-one (21) days after receiving from the Treasurer the instrument duly inscribed in accordance with subsection 27(4) and on payment of the stamp duty as assessed.

Many governments around the world have developed a form of administrative rights that taxpayers can expect in their dealings with the tax enforcement agency or departments.  With the introduction of VAT and the tax reform that has taken place in The Bahamas, the Bahamian government has also developed and published The Bahamas Taxpayer Rights.  For the most part, such rights are intended to increase accountability and transparency on the part of the Department of Inland Revenue and ensure greater compliance with tax laws and an excerpt from the Bahamian publication is as follows:

WHAT YOU CAN EXPECT FROM US – YOUR RIGHTS AS A TAXPAYER

You have the right to:

• Have the law applied consistently and impartially
• Accurate and clear information and guidance
• Fair treatment, regardless of your circumstances or affiliation
• Pay no more (but not less) than what is required by law
• Confidentiality in respect of the information held by us about you
• Privacy with respect to your dealings with us
• An impartial objection and appeals process
• Be represented by a person of your choice
• Have your concerns heard and acted upon as appropriate

WHAT WE EXPECT FROM YOU – YOUR OBLIGATIONS AS A TAXPAYER

You are required to:

• Meet any obligations that you have with respect to the making of any application, the filing of any return, or the payment of any amount for which you are liable on time
• Ensure that the information that you provide to us on any document is true and accurate, and take care when preparing applications or returns
• Keep accurate books and records as required and make the same readily and timeously available to us where obliged to do so
• Treat our staff with respect and not hinder them in the performance of their duties

None of the rights outlined in the Taxpayers’ Rights are legally enforceable under the law and are essentially a set of regulatory standards for the government’s dealings with taxpayers.

As the VAT Act becomes more mature, we will inevitably see more situations of tax planning that may be challenged under audit

Therefore, compliant tax planning - arranging one's affairs so as to be as commercially efficient as possible from a tax .perspective, and whether any transaction that is sought to attach a tax or tax consequence that emerges from a series or combination of transactions should be treated impartially and consistently under the Taxpayer Rights

While these rights and obligations are essential to the administration of the tax system, they do not replace the statutory processes that should be followed in the event of a dispute.  The Department of Inland Revenue (“DIR”) website provides a number of guides and policy documents for managing your reporting. However, there currently are no formal published policies and procedures for disputing a tax assessment.

Until such formal policies and procedures are issued, the following steps
should be taken in the event of an audit or government inquiry:

• Before the audit, involve your professional advisor to assist with pre-planning and ensure you have correct documentation to support you during the review and examination.
• If prior to the audit, inconsistencies are identified or require clarification, request a ruling from the respective authority.
• During the audit, have just one point of contact within your organization to assist with data accumulation and preparation of responses to information requests.  This person should be an individual who is most familiar with your filings and has a good understanding of the tax law.
• After the audit, review your assessment to ensure the amounts are accurate and agree to your books and records.
• Discuss the assessment with the auditor and/or their manager to ensure you understand the reasons and legal basis for the assessment. Some disputes are caused by lack of information or simple miscommunication. 
• If you still do not agree with the assessment, document your issues and reasons in writing, clearly stating the facts and supported by copies of documentation and/or references to the law. Be sure you submit this letter to the respective government agency within the respective time periods (e.g. 30 days for VAT, 21 days for Business License) and maintain evidence of your communications. 

At the end of the day, taxpayers that believe they have been wrongly assessed should consult with their professional advisor and follow the statutory rules to file their objection and assert a lawful basis for their dispute. At KPMG we assist our clients in negotiating, managing and resolving disputes with the tax authorities and in preventing tax disputes in the first place.