Some Grenadine businesses robbing IRD – Comptroller

The Inland Revenue Department (IRD) says that it is concerned with the level of Value Added Tax (VAT) compliance being exhibited by the construction sector in the Grenadines.

Comptroller of the Inland Revenue Department Kelvin Pompey told SEARCHLIGHT on Wednesday that the construction sector in places like Canouan, Mustique and Bequia is a bit problematic when it comes to VAT compliance and the department is working diligently to sort out the problems. Issues include delay in persons paying the VAT, persons not charging VAT and persons collecting the VAT and not handing it over to the IRD.

This Monday, May 1, the increase in VAT from 15 per cent to 16 per cent takes effect and Pompey is urging compliance by persons in the VAT net.

“…we have been working along, especially with the big companies in Canouan, Mustique and Bequia, to be more proactive with contractors to make sure that when the VAT is collected by them it is paid over to us,” stressed Pompey.

However, these companies are not the only ones that have been giving extra work to the VAT Unit, as according to Pompey, they have been having problems with some of the smaller retail merchandising stores, specifically those involved in retailing

clothing and household items.

Pompey said that they have observed that in several instances there are businesses that are not closing back their cash till after a sale and, as a consequence, these businesses do not give receipts.

He added also that a number of businesses do not ring up their sales and because of this, the evidence, in terms of the paper trail that the receipt will provide, is not there.

“…so when we go through to audit, we have those kinds of problems. Additionally, we have been informed and have evidence that they are a few businesses that when they are ringing up the sales, they are putting in a lower quantity; so, if somebody buys an item of $30 they put in three dollars and the VAT is charged on the three dollars, but they collect the full amount from the consumer,” said Pompey.

“We have the information; we have persons on the ground who know what is what and we are putting the strategies in place to deal with these issues… and a person who is found contravening the VAT regulations can be charged EC$25,000 and that is an administrative penalty,” pointed out Pompey, who added that there are larger fines and prison sentences for persons who try to defraud the IRD.

“We will be paying special attention to these persons as we go into this 10th year of VAT, but generally, most businesses have been very co-operative and have been working along with the department,” noted the IRD boss.

Pompey said that this is happening as a lot of persons do not ask for their receipts and are not scrutinizing their receipts.

“We are making an appeal to consumers to ask for their receipts and to scrutinize them to make sure that the VAT that they pay is fully accounted for. Hopefully, we would reach to the stage, like in some Scandinavian countries, where it is against the law for a consumer not to ask for and get a receipt… and it is against the law for a business not to provide a receipt,” the IRD comptroller said.

He added that it is important that the Government look at the existing legislation and strengthen it, so that all businesses are forced to give receipts and customers become educated and begin to pay special attention to their receipts.