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Better VAT collection system soon – PM

Better VAT collection system soon – PM

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The Government of St. Vincent and the Grenadines will be implementing measures to address the non compliance in the payment of Value Added Tax (VAT) to the Government.{{more}}

This is according to Prime Minister Ralph Gonsalves, who addressed issues related to VAT during the presentation of his Budget Address on Monday, January 9, 2012.

Gonsalves stated that VAT revenue has fallen since 2008, with one of the contributing factors being the “reduced level of compliance by VAT Registrants.”

Gonsalves stated that VAT has continuously fallen since 2008, moving from $153.54 million in 2008 to $132.30 million in 2011. VAT, which was introduced in St. Vincent and the Grenadines in May 2007, replaced the consumption tax and several other taxes.

“The reduction in the level of tax compliance is particularly troubling as persons are collecting taxes on behalf of the Government and failing to pay over the funds to the Treasury.” Gonsalves said, adding that as of December 2011 areas of VAT were estimated at $25 million.

“The Government can no longer tolerate such behaviour by a few delinquents…” Gonsalves said. The measures, he added, will be aimed at reversing the downward trend in revenue from the VAT and correcting the weakness in the administration of the tax.

Other factors which contributed to the fall of VAT Gonsalves said were the increases in the exempt and zero rated items and increased levels of fiscal concessions granted. He added that the decline in VAT collection is partly attributed to the global economic recession, with its consequential impact on the domestic revenue decline.

“…this fact can explain no more than a small fraction of the revenue decline,” he said.

The corrective measures include the stricter enforcement of the VAT act and the Income Tax Act regarding the collection of unpaid amounts and the removal of some items from the zero-rated list by transferring them to the exempt list. Items include cooking oil, salt, yeast, baking powder, shortening, sanitary napkins, baby diapers and napkins, toilet tissue and men, women and children undergarments.

“One other matter we propose is to deal with is the anomalous situation whereby exports are zero rated except for unprocessed agricultural products which are instead treated as exempt,” Gonsalves said. He further proposed to zero-rate exports of unprocessed agricultural products, which he said will be more advantageous for our exporters of these goods.

Gonsalves, however, noted that it is normal in a VAT system in its early years of operation to make adjustments and correct anomalies. (OS)

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