Basseterre, St. Kitts (SKNIS): The percentage rate of the Value Added Tax (VAT) and the type of items that will attract those rates have not been determined and residents of St. Kitts and Nevis will have the opportunity to share their opinion on the matter.
 
On Friday (March 26), Prime Minister and Minister of Finance, Honourable Dr. Denzil Douglas told the Federal Parliament that Government’s consideration of VAT has been an issue that has been debated with stakeholders for the last three to four years.
 
He mentioned that the Ministry of Finance had interactions with members of the Chamber of Industry and Commerce over the years on the matter. Other quarters have also been engaged in such consultations including the youth, which discussed the matter with members of the Cabinet in 2007 at a National Youth Dialogue.
 
The Prime Minister took issue with statements by various individuals who suggested that VAT was being introduced “like a thief in the night,” and would complicate the tax structure. He emphasized that the VAT would have the opposite effect as it would replace at least 10 nuisance taxes and modernize the tax system in a new and diversified economy.
 
These taxes include the Consumption Tax, Hotel and Restaurant Tax, Vehicle Rental Levy, Parcel Tax and others.
 
Prime Minister Douglas expressed in discussions with SKNIS that “economic and social partners will be continuously consulted on VAT as a number of decisions are yet to be made.”
 
The Tax Reform Team is currently designing a series of advisory visits to businesses to ensure that they understand relevant issues. Public consultations will also be held throughout the Federation – and residents are strongly encouraged to participate. Consultations will begin in the month of April.
 
Legislation for VAT, however must be drafted and enacted several months before the introduction of the tax. This will allow for meaningful consultations and facilitate timely registration of VAT taxpayers as well as effective dissemination of information to taxable persons and the general public. As such the VAT Legislation is expected to be passed by May 2010.
 
Consultations on the draft legislation will commence and recommendations will be taken on board and submitted for consideration before the Act becomes law in time for its scheduled implementation in November.