BASSETERRE, St. Kitts – FOLLOWING consultations on Thursday (Apr. 8) between the Tax Reform Office and the St. Kitts-Nevis Hotel and Tourism Association (HTA), the body of hoteliers and restaurateurs has asserted that the November 1 deadline set for the introduction of a Value Added Tax (VAT) is “seemingly unrealistic”.
Representatives from the Tax Reform Office (TRO) in the Inland Revenue Department gave an overview to the 50-plus attendees on how the new tax works and some of its general implications for the tourism sector. They also fielded questions from the various stakeholders.
According to the Prime Minister and Minister of Finance, Dr. Hon. Denzil Dougls, a major education and public awareness programme on VAT will begin in April before the passage of all necessary legislation for the new tax in May.
Head of the TRO Edward Gift told SKNVibes in a previous interview that before the end of the month a press release would be issued with regards to the launch of the VAT website and the VAT White Paper, a document that will outline the major policy issues in relation to VAT.
HTA President Nick Menon subsequently stated that because the White Paper on VAT has not yet been produced, the government officials were not in a position to disclose some of the particulars of the new consumption tax.
He noted that the HTA members present for Thursday’s consultation were able to express their concerns, but were ultimately left with “more questions than answers” and anxiously await the White Paper.
“Everyone was very concerned with the time frame. Given that the White Paper is yet to be disclosed, we thought that the timescales for consultation were inappropriate.
“I think the speed is the most worrying thing for our membership. The mechanics of the tax, how it works, what you need to do to ensure you have the correct recorded keeping were all communicated to us. We all understood that. However, that’s only one small part of it,” Menon stated.
The HTA head added that the introduction of VAT is a “very complicated issue” and the tourism stakeholders have concerns about the administration and collection of the tax, calculations and auditing of input and output taxes, additional cost brought on businesses, goods and services to be exempt and other “peculiarities” regarding service-related businesses.
He maintained that for the widespread education of the stakeholders and consumers at large six months is likely to be a “very limited” timeframe.
“When we research the introduction of VAT in other jurisdictions, consultations came about 18 months to two years before implementation – a very extended consultative period and that’s not happening here. It may be a situation where the tax base needs to be broadened for government revenues to increase. However, it is complicated and there will be teething problems; and the more consultations we have, the less teething problems we will have at the end of the day.”
These concerns come just two weeks after President of the St. Kitts and Nevis Chamber of Industry and Commerce (CIC) Michael Morton expressed his reservations with the November 1 deadline.
He argued that the time allocated for the execution of massive public education, national consultation, passage of the requisite legislation, and actual introduction of the tax is “too short”.
The contents of the White Paper on VAT, to be published in the coming weeks, are expected to give a clearer understanding of how the implementation of the new tax may affect the member businesses of the HTA, CIC and the nation at large.
Menon stated that the HTA would be issuing a full press statement regarding Thursday's consultation shortly.
