The Ministry of Finance and the VAT (value-added tax) Department have begun issuing fines up to $10,000 and warnings to more than 200 businesses who have declared turnover above the $100,000 threshold and who submitted late applications. Noting that the mandatory registration deadline of November 30, 2014 is long passed, the VAT department claims to have been lenient during the transition, and points out that the penalties assessed in this exercise reflect a grace period for all applications that were no more than 16 days late.

"However for later submissions letters vary from a warning for very small business to fines ranging between $250 to $10,000 for large businesses," the department said in a press release.

"The details of this penalty structure, which is transitional in nature, are being published on the government's website. It covers late submission received up to January 15. Mandatory registrants applying after January 15 could face higher penalties, on a graduated scale."

New rules
Meanwhile, new VAT rules have been published covering a number of different situations, such as clarification on the transitional arrangements as it relates to hotel bookings, which apply for the period beginning prior to September 1, 2014 until December 31, 2015.
This particular rule applies to the treatment of hotel bookings made prior to September 1, 2014, to situations where the time of supply as it relates to the application of VAT for transactions preceding the date of entry into force of VAT but concluded on or after January 1, 2015, and to treatment of hotel bookings made on or after September 1, 2014 - December 31, 2014, where the service is provided on or after January 1, 2015 but no later than June 30, 2016.

The new hotel bookings rule also applies where deposits have been made towards securing the accommodation and where services are included as part of a package that also involves hotel room accommodation and payment hotel occupancy taxes.

The new rule says, "Hotels can treat as exempt any secured booking received and for which a payment in part or whole, has been received before September 1 2014, where the vacation takes place on or after January 2015 but no later than June 30, 2016. These will remain subject to hotel room taxes. Bookings that qualify for this treatment must have been notified to the VAT department by October 15, 2014."

The VAT Comptroller's new rule also allows that for hotel bookings secured under grandfathered (under the Hotel Occupancy Tax regime) provisions and for which no VAT will be charged, the service providers must submit details of the monthly value of the paid bookings to the VAT department.

Services that start prior to January 1, 2015 and whose delivery continue after January 1, 2015 shall be treated separately for VAT, with only the portion of the stay from January 1, should be subject to VAT. Also, accommodations for hotel reservations for which a payment, in part or whole was received on or after September 1, 2014 but prior to January 1 2015 in relation to accommodation where the service is delivered on or after January 1, 2015, are subject to VAT at the standard rate.

"Deposits received by hotels for accommodations to be supplied in the future shall not be treated as the point of supply. VAT will only be accounted for when the deposit is forfeited or when it is applied to the value of the occupied accommodation."

Other rules were published relating to establish the variables to be used by financial institutions (Clearing Banks) to claim input tax incurred in their operations, to provide additional rules for the display of the menu pricing for dine-in restaurants and hotel restaurants, the definition of a continuous journey for the purpose of international transport and for the purpose of specifying the circumstances under which a debt or credit note will be issued and the contents of such Notes.

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