BASSETERRE, St. Kitts – LESS than two days before the implementation of Value Added Tax, the government and the St. Kitts-Nevis Chamber of Industry and Commerce (CIC) agreed on concessions to avoid an inflationary effect on the new tax system.
Representatives of the two teams, which included Prime Minister Denzil Douglas and CIC’s President Michael Morton, concluded four days of negotiations on Saturday (Oct. 30) and unanimously agreed that neither the public nor private sectors wanted the inception of VAT to present undue financial burden on consumers.
According to a release from the Communications Office of the Prime Minister, there was consensus on the impact VAT would have on prices and the inventory on hand for which tax would have already been on or before October 2010.
The release noted that it was generally agreed that the ongoing Government Stimulus Programme would be expanded to incorporate the manufacturing sector.
“Consensus was also achieved regarding Government’s provision of an 8% credit on goods in stock as at 31 October, 2010 for which consumption tax would have already been paid, given that VAT at 17% would otherwise likely be applied to the price of the said goods come November 1, 2010,” the release added.
It further noted that the two teams also agreed that merchants, distributors and/or wholesalers would not increase the prices of such goods by more than 8% of current prices until such stock is depleted. And after the stocks are depleted, the consumer would see variable adjustment in prices.
A number of administrative provisions would also be put in place in order for the inventory credit to be effected, including but not limited to, enterprises applying for the inventory credit by 30 November, 2010. However, in doing so, they must present proper documentation of such stock actually being on hand as at 31 October, 2010.
The inventory credit, as explained in the release, could then be used by businesses to cover taxes due to the government and also utility charges. However, the Comptroller of Inland Revenue reserves the right to deny or exclude any inventory or part thereof that could not be reasonably verified.
“Saturday’s private/public sector deliberations on VAT concluded with both Government and the Chamber agreeing to sustain consultation and collaboration in the interest of ensuring a smooth transition to the new tax regime.
Both sides have committed to maintain high levels of dialogue on VAT and to conduct a VAT implementation assessment after three months in an effort to ascertain how well the new tax structure is operating in practice – with a view to making improvements where necessary.
The new tax system was today (Nov. 1) officially implemented in St. Kitts and Nevis.
