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‘Businesses must be prepared for VAT’

‘Businesses must be prepared for VAT’

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Deputy Prime Minister and Minister of Trade, Sir Louis Straker, has called on local businesses to get in line and prepare for the Value Added Tax system (VAT), expected to be implemented here by January next year.

The Deputy Prime Minister made the call while addressing the formal launching of the White Paper on the VAT system last Friday at the Ministry of Foreign Affairs conference room. {{more}}

Sir Louis mentioned that businesses would have to make some changes in the way they carry out their activities, noting that changes to registration, maintaining proper records, the issuing of receipts and the collection of the VAT must be a priority for businesses.

According to the Trade Minister the VAT will be an ideal opportunity to increase efficiency.

“VAT will impact on each of us; it’s our responsibility to be informed on the changes in the tax system,” Sir Louis said.

The deputy prime minister acknowledged that while the most likely rate for the VAT would be 15 per cent, government would be cushioning the cost on some services including Day Care, Transportation and Medical services.

“Some of these goods and services would be zero-rated, because we are catering for the needs of poor people,” Sir Louis said.

The use of VAT will see some changes in the way businesses and consumers contribute to the government’s revenue.

As part of the tax reform process, Vincentians will see an elimination of consumption tax on all goods imported, while international telecom surcharge and stamp duties will no longer be a burden to taxpayers.

These charges will now be replaced by the value-added system allowing a broader tax base to include more goods and services.

Originally introduced in France in 1954, VAT is now a major part of the tax structure of most European countries, while in the region Barbados, Jamaica and Trinidad and Tobago have successfully implemented the Value-Added Tax system with proposed reintroduction in Belize and Grenada.

The VAT implementation process began here through consultancy studies in 2002 and has gained momentum since the establishment of the local VAT unit, which was set up in March 2005. Headed by retired Comptroller of Customs, Alma Dougan, the unit is responsible for training and public awareness, and has been instrumental in the drafting of the VAT bill and the publication of the White Paper.

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