Association of Certified Fraud Examiners (ACFE) President Kendrick Christie yesterday expressed concern over the possibility of businesses facing strict value-added tax (VAT) penalties without adequate fraud examination.
Christie told Guardian Business that he anticipates a rocky implementation phase as businesses adapt to the tax once it comes into force on January 1. While he expects some businesses to exploit the tax, he urged the VAT Unit to ensure that businesses are not hastily accused.
"With any new tax system there are going to be individuals who try to take advantage of the perceived ignorance of consumers. You have individuals who will also be trying to avoid payment of the tax.
"However, companies and individuals are innocent until proven guilty so you need to make sure that you investigate it properly. I'm just really concerned that if someone is accused that there won't be a proper check and that's where we come in. We need to make sure that businesses are not accused of something they're not doing," he said.
Christie, a partner at Grant Thornton, also said that he expects more forensic accountants to be needed following VAT's implementation, particularly in the tax's infancy before the Central Revenue Agency (CRA) is fully established.
"I think you're going to see some uptick in forensic accounting, because although the CRA is going to come at some point there's going to be a case where they don't have sufficient manpower or resources.
"I think the VAT Unit is vigilant and doing some training, but I think there will always be the case where they don't have enough people, or the sophistication, in the early stages of implementation," said Christie.
The proposed CRA has been touted as a one-stop shop for several of the government's tax collection agencies. Although Financial Secretary John Rolle had previously told Guardian Business that some of the CRA's departments, namely the VAT, business license, and property tax departments, would operate out of the same facilities as early as January, there is still no clear date for when the CRA will begin operations at its newly-proposed facility.
Christie warned businesses and consumers to be wary in early 2015 due to the likelihood of some companies deliberately charging VAT on goods without being registered. Christie cited Jamaica and Antigua as jurisdictions that had seen a steady increase in their cash-backed black market economies following inadequately-regulated VAT implementation.
"If you figure that that's happening in other jurisdictions, you may see that develop here because there may be pressure too from consumers not wanting to pay the tax, so either you eat it or you develop a system of having items paid in cash, he said.
VAT will be implemented at a rate of 7.5 percent on January 1, 2015.

Click here to read more at The Nassau Guardian