Bahamas Removes VAT on Unprepared Food From 2026

January 25, 2026

Featured Partners

On January 12, the Bahamas' Prime Minister Davis announced new measures aimed at easing the cost of living for local residents, noting that, despite progress since the country's recent economic crises, many households still face high prices for everyday essentials. As part of the plan to provide tangible financial relief to Bahamian families, the government stated it will remove VAT on unprepared food, thereby lowering the tax burden on everyday groceries.

New VAT Measures for Everyday Essentials

As announced by the Prime Minister, the reduction in VAT from 5% to 0% on unprepared food and everyday groceries, such as fresh fruits and vegetables, baby food, fresh and uncooked or frozen meats, will take effect on April 1, 2026. Nevertheless, it is necessary to note that the measure will not apply to prepared meals, restaurant food, or items processed or cooked before sale.

The measure is part of the government's ongoing efforts to make life more affordable. It follows previously introduced measures, such as increasing the minimum wage, expanding access to free medication through the National Prescription Drug Plan, providing electricity bill relief, and implementing the National School Breakfast Programme. It is worth noting that the government has already lowered the standard VAT rate from 12% to 10% and reduced the applicable VAT rate on essential items to 5%, as part of efforts to reduce living costs.

Conclusion

With the latest reduction in the VAT rate on unprepared food and everyday groceries, the Bahamas government is further reforming its VAT system, with a clear goal of ensuring that tax reductions translate directly into savings for consumers at the checkout. Nonetheless, while the measure is primarily aimed at helping consumers financially, it also impacts taxable persons. Therefore, all taxable persons affected by this announcement should monitor for any additional information and guidance on new tax measures from the relevant ministries.

Source: Office of the Prime Minister

What VAT change did the Bahamas announce for unprepared food?

The Bahamas government announced that VAT on unprepared food will be reduced from 5% to 0%, meaning these items will no longer be subject to VAT.

When does the VAT removal on unprepared food take effect in the Bahamas?

The VAT reduction to 0% on unprepared food and everyday groceries will take effect on April 1, 2026.

Which food items qualify for 0% VAT under the new measure?

The measure applies to unprepared and everyday grocery items such as fresh fruits and vegetables, baby food, and fresh, uncooked, or frozen meats.

Are prepared meals and restaurant food included in the VAT reduction?

No, the VAT removal does not apply to prepared meals, restaurant food, or items that are processed or cooked before sale.

Why is the Bahamas government removing VAT on unprepared food?

The policy is designed to ease the cost of living by lowering grocery prices and ensuring that tax reductions translate directly into savings for consumers at the checkout.

How does this VAT change affect businesses and taxable persons?

While the measure primarily benefits consumers, it also affects taxable persons, who should monitor further guidance from relevant ministries on how the new VAT rules will be applied.

Bahamas

Americas

Tax Compliance

VAT Compliance and Reporting

Tax Rates

VAT

Retail