VAT to be charged on electricity use over 150 kWh, come May 1
People who use more than 150 kilowatt hours (kWh) of electricity per month, will from May 1, 2018, pay Value Added Tax (VAT) on the amount by which their consumption exceeds 150 kWh. â
This is one of the new fiscal measures announced by Minister of Finance Camillo Gonsalves on Monday during the 2018 Budget address.
âCurrently domestic customers consuming 200 units (kWh) of electricity or less do not pay VAT on their electricity consumption. This means that less than 23 per cent of VINLECâs domestic customer base now pay VAT on electricity,â said Gonsalves, who added that St Vincent and the Grenadines (SVG) is one of the few CARICOM countries to be so generous on this matter.â
âMost countries in the region either pay VAT on all electricity consumption or on a monthly consumption in excess of only 100 units (kWh).â
He stated that with the lowering of the VAT threshold to 150 units or more, just 36.0 per cent of VINLECâs domestic customers will now pay VAT and this adds only 13 per cent of consumers to the potentially âvatable list.ââ
âThe poor do not consume 150 units (kWh) per month, so they would still not pay the VAT. The VAT is payable only on the basic charge and is not paid on the fuel surcharge,â explained the Finance Minister.
This measure is expected to provide an estimated $1 million in additional revenue annually.
âWe anticipate that as consumers continue to implement more energy efficient measures in their households, the level of electricity consumption would decline, thus reducing the number of domestic customers who will fall within the VAT threshold,â said Gonsalves.