BASSETERRE, St. Kitts – AS part of the plan to reform the current taxation system, the government of St. Kitts and Nevis will implement the Value Added Tax, commonly known as VAT, on November 1, 2010.
This tax is expected to affect all forms of consumer spending on goods and services, which includes entertainment.
SKNVibes spoke with Edward Gift, head of the VAT office, who explained how the imposition of this new tax system would affect someone in the business of providing public entertainment.
He said once they recognise that their threshold would be in excess of EC$150 000 per annum, they would be required to register with the Inland Revenue Department, under Section 12 of the Draft Bill.
“Section 12 of the Act identifies that Sub-section Four, once somebody operating a regular business as an entertainment they will be required to register under the Act. Once they believe they will earn more than $150 000 in sales in a year, they’re required to register at the Inland Revenue Department, either in St. Kitts or Nevis.
He said that if a promoter is planning on bringing in an artiste from overseas to perform on an event that person will have to register under sections 13 of the Act.
“If there is someone who doesn’t own a club and is in an on and off basis organising an entertainment function and would like to bring in an international artiste, they would be required to register under Section 13 of the Act and they must register within seven calendar days before the event. That person would be required to collect VAT on behalf of the government,” he said.
Gift noted that the same goes for persons who promote functions on a monthly basis.
“They would still have to be registered with the Inland Revenue under Section Four. And in the month they don’t keep an actual function or business, they would have to file a Nail Return…those irregular persons would be correctly categorised Under Section 13 of the Act.
“So, if it’s a promoter and they are only having a one off event, they wouldn’t have a fixed place of business, then they would be required to register Under Section 13 of the Act,” he said.
Gift further said it is about what is estimated for those persons and businesses to make; as the law states, the total value of the promotion or Proprietor Tax Supply, is reasonably expected to exceed $150 000.
“So, that is something the promoter and Inland Revenue would have to discuss, because the person is not sure if their event would make under $150, 000,” he said.
Gift added that the business owner would have to prove the business did not reach the $150 000 threshold by providing a history of the entity and other measures.
“Officers will also be sent to the event to check the function. Once they recognise that particular function does not have a history of making over $150 000, they may not be asked to register,” he said.
Gift said the businesses must recognise they would be in a more beneficial position, because the imports that are used to perform at the entertainment function, as some of them import their own audio equipment, they will get tax reductions on that.
“And now they will be given tax reductions for that. Now the VAT on those equipment arranges around 22 percent. It will be 17% and, on top of that, they will be able to get back that amount from their tax return when they file with the Inland Revenue Department,” he said.
He however declared that if an artiste is earning over $150 000 a year, VAT would have to be collected.
Club owners may increase their price range for function attendance, as there would be an increased cost on the purchasing of alcohol beverages that are usually served at events.
“That is something we may have to accept as a society. Remember the consumption of alcohol, cigarettes and tobacco has negative effects on the whole society. They increase healthcare costs as there are a lot of diseases related to the consumption of alcohol and cigarettes, and we as a society have to pay for those persons to be taken care of. The taxes on those items would be increase slightly. They may try to reduce the price, but at the end of the day they have to make sure they collect the VAT.
“When he purchases items from TDC, RAMS, O.D. Brisbane or any other business, in terms of food and alcohol, and he pays VAT, the VAT he pays, once he’s registered, will be deductable. We encourage persons having documents to verify the amount that they deduct is actually correct or authentic,” he said.
