Posted on

VAT in SVG changing the face of taxation

VAT in SVG changing the face of taxation

Share

TODAY IS DAY FOUR since the introduction of Value Added Tax (VAT) here in St. Vincent and the Grenadines, and the government hopes the tax will “change the face of taxation in a way that would bring lasting benefits to the economy and the society as a whole”.

Making a pre-vat statement on Monday, Acting Prime Minister and Acting Minister of Finance and Economic Planning Sir Louis Straker stated that there are a number of benefits that are to be derived from the VAT system which has proven to be an effective instrument for removing distortions and inefficiencies in the economic system.{{more}}

According to Sir Louis, VAT would broaden the tax base to include services thus making it possible for the tax yield to increase. Prior to this, the system of indirect taxes rested heavily on goods and did not apply to services.

Sir Louis said that the VAT allows the tax to spread evenly among all sectors, thus ensuring greater equity. He said the VAT would be applied cleanly on value added at each stage of its application and the credit system ensures that no compounding of tax occurs.

In relation to the preparation for the VAT, Minister Straker revealed that the country received technical assistance from the Caribbean Regional Technical Assistance Centre (CARTAC) in Barbados who provided them with experienced consultants from various countries.

In 2005 a feasibility study was conducted to review the benefits of introducing the VAT after which a VAT White paper was made available for discussion and review by the relevant stakeholders. This according to the acting prime minister raised a number of concerns by stakeholders and therefore resulted in a number of changes including increasing the threshold for registration to $120,000 gross revenue.

In addition, Sir Louis also pointed out that the VAT Act takes into account policies for alleviating its impact on disadvantaged social groups which include the non-application of VAT on basic food items including rice, sugar, flour, milk and baby food.

Hospital, medical services, educational and daycare services are also exempt.

A series of meetings is expected to continue to sensitize the public about the VAT for the rest of the year. Beginning early 2006 a series of meetings was conducted by the members of the VAT unit to educate both the potential registrants and consumers regarding the mechanics of VAT.

LAST NEWS