PM Douglas describes first day of VAT "hectic" and "challenging"

BASSETERRE, ST. KITTS, NOVEMBER 2nd 2010 (CUOPM) – The introduction of Value Added Tax (VAT) on Monday November 1st 2010 “was hectic as anticipated and challenging, also anticipated.”
 
So said St. Kitts and Nevis Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas after a briefing with Head of the TAX Reform Union Mr. Edward Gift and his Deputy Ms. Velda Irish following his return to the Federation from nearby St. Maarten where he was attending the 10th Annual General Meeting of PANCAP.
 
Speaking to officers of the VAT Office after the briefing, Prime Minister Douglas said he has been informed that the full complement of the Staff has been carrying out an audit of businesses and making sure that business owners are complying in the marco-way that they are expected to be complying.
 
“That they have their VAT Certificate prominently displayed, making sure that those who are collecting the VAT should be collecting it, making sure that the right amount that should be collected is being collected and that you will carry out the appropriate challenge wherever you notice that there is a discrepancy,” said Dr. Douglas.
 
He emphasised that the success of the new tax regime is going to depend on compliance which is a two-way street.
 
“It is to ensure that you know what people should be complying with and that they are actually demonstrating that they are complying. It means therefore that your knowledge base is going to be critically important in making sure that before you go out to conduct checks, you must have basic information as to whether the person you are going to actually had received a visit and whether that person has had relevant information explaining what they should be doing  in the collection of the VAT,” said Dr. Douglas, who told the officers that he understands they would have the opportunity to check on the sales receipts that the customers are receiving.
 
“This is going to be critically important as part of the compliance schedule,” said Dr. Douglas who reiterated that the first day has been critical in that officers were able to “get a feel of it.”
 
“You are now actually in the thing and today has been the first experience that you ever would have had in the new system of taxation through the Value Added Tax (TAX),” said Prime Minister Douglas in expressing gratitude to the officers.
 
“The Government is grateful to you. The Ministry of Finance is eternally grateful for your assistance, your continued input and your support,” said Dr. Douglas who relayed the confidence of the Financial Secretary Mrs. Janet Harris that they will make sure that things are working as they should be working
.
“Some people seem to be questioning whether things are working. You have to make sure that things are working and that they work right, not only for the customer or consumer but that they work right for the employers or the business people and they all work right for the country on a whole,” said Dr Douglas, who personally thanked Mr. Edward Gift and his team of dedicated workers.
 
“This is the real test and the success is going to depend on you,” said Prime Minister Douglas.
 
“You are an important group of people. You are revolutionising the tax system in St. Kitts and Nevis. It is a path that we hope we would not have to cross again,” said Prime Minister Douglas who pointed out that Grenada introduced it and had to withdraw it and re-introduced it again.
 
“We in St. Kitts and Nevis don’t want to get into that, when we start, it must start right, it must move, it must work, it must deliver and everybody at the end of the day should be happy. The Value Added Tax (VAT) of 17 percent replaces a 22.5 percent Consumption Tax and 11 other nuisance taxes.
 
Ahead of the introduction of Value Added Tax (VAT) on November 1st, the Cabinet has approved the complete removal of import duty on several food and non-food items.
 
Twenty items have been reduced to zero percent and seven others reduced by five and 20 percent.
 
These went into effect with the implementation of the 17 percent Value-Added Tax and the abolition of the 22.5 percent consumption tax. Since September Government had reduced the Consumption Tax from 22.5 percent to 17 percent.
 
The import duty has been completely removed from Tuna (canned); Sardine (canned); Skipjack and Bonito (canned); Sardinella, Brislings/Sprats (canned); Salmon (canned); Herrings (canned); Mackerel (canned); Chicken; Cheese; Canned Sausages; Corn Beef; Salt Fish/Herrings (Fresh); Mackerel (fresh); Salmon (Fresh); Ham (smoked, chilled, frozen); Baby Beverages (Juices); Pig Tails, Ears and Snout; Exercise books; Insecticides and rodenticides.
 
The import duty on Pasta, Margarine/Shortening/Lard and Vegetable Oil has been reduced from 25 percent to 10 percent and Tomato Ketchup from 20 percent to 5 percent.
 
The import duty on Eggs has been reduced from 40 percent to 20 percent and mosquito coils from 25 percent to 5 percent.
 
Several items and services are zero-rated. These include Adult disposable diapers, Baby disposable diapers, Bread, Flour, Fuel, Infant Formula, Milk, Oats, Rice, Sale of commercial property from one VAT registrant to another and Sugar.
 
Regarded as exempt imports are goods if the Comptroller is satisfied that VAT has previously been paid on the sale or importation of such goods; Challenge Cups and other trophies presented to participants in an event outside of the Federation; Currency notes and coins imported under the Eastern Caribbean Central Bank Agreement; Goods temporarily admitted in the Federation for repair, cleaning or reconditioning, including parts associated with that work; the human remains of a person who has died abroad; unconditional gift of goods without consideration to an approved religious organization and not for sale and unsolicited gifts of food of 45 kilograms.
 
Exempt supplies include supply of basic construction services on a residential home, a supply of medicines for chronic diseases approved by the Chief Medical Officer, a supply of printed matter, articles and which items include books, newspapers and pamphlets; a supply of the following agricultural inputs: (seedlings, seeds, cuttings, fertilizers, herbicides, fungicides, nematicides approved by the Minister of Agriculture; animal feed other than food for domesticated animals generally held as pets; plant propagation bags; poultry, eggs produced locally by the producer; fibre-glass and wooden boats, anchors, G.P.S, compass, V.H.F. Radio. Bus & Taxi Fees, Education services, Electricity, Insurance, Interest on loans, locally produced agricultural produce grown in the Federation, Medical services, Residential Rent and Residential Water.