Financial Secretary John Rolle said yesterday that the Value-Added Tax (VAT) Department is still seeing a "very good response" from the business community in terms of filing and payment but warned that the department is progressing beyond issuing "just the friendly reminder" to late filers.
Speaking at the future site of the Department of VAT and Inland Revenue, Rolle said the VAT Department anticipates more instances of financial penalties as the department shifts its energies to addressing compliance from the consumer's perspective.
"We're now going into the establishment and doing more than just warning and exhorting them to set things right. So where there still may be irregularities in terms of pricing displays or the issuing of VAT receipts and invoices, we are beginning to move away from just the friendly reminder," stated Rolle.
Regarding the overall success in collecting the tax, Rolle stated that he still expects the government to see a $300 million net increase in tax revenue for the fiscal year after recouping approximately $100 million in revenues lost through a suite of tax concessions unveiled during the 2015/2016 budget communication.
"The intake so far continues to line up with expectations in terms of the on-time compliance rate as well as payment of the VAT that has been declared to the government. Overall, we're seeing a very good response. As part of the process, though, there's a very constant and close interaction with businesses to make sure that not only they file their returns on time but that they follow through with payment," said Rolle.
"The actual amount of VAT that the government will collect in both cases will be more than $300 million and more than $150 on a half-yearly basis because the net increase also had to make provisions for about $100 million on a yearly basis from reduced customs duty collections as well as the fact that the government had eliminated the Hotel Room Occupancy Tax," Rolle added.
The VAT Department recently launched a VAT companion app for Apple and Android devices to assist consumers to calculate VAT totals. While the current service allows users to send photos of potentially fraudulent receipts to the VAT Department, Rolle expressed interest in expanding the service's reporting capabilities and hopes to see similar apps to assist with calculating various additional government taxes.
Tax compliance
However, VAT is just one aspect of the government's fiscal reforms to clamp down on outstanding taxes. As of July 1, 2015, all suppliers doing business with the government will require a tax compliance certificate (TCC), which requires such businesses to be current on all of their tax obligations including VAT, customs duties and levies, business license, property tax, road traffic, immigration fees and National Insurance contributions.
"The business public and all government agencies will see an increased emphasis going forward on the use of the TCC," said Rolle.
"It doesn't just apply to the ministries; it applies to all of the corporations that fall under the government so they will all have to be certain that the vendors that they deal with are in possession of up-to-date tax compliance certificates," he added.
Under the Financial Administration and Audit (Amendment) Bill, 2015, a TCC will be required for any persons or businesses submitting a tender for the award of a contract with the government or public body; collecting payment for services rendered under a government-awarded contract worth $10,000 or more; receiving a concession in accordance of any legislation conveying a concession; and registering the ownership of or changing the ownership in any good on which the tax is required to be paid.
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