The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE proposed Value-Added Tax (VAT) regime will likely exacerbate the more “acute” cash flow issues facing Family Island businesses, a well-known attorney has warned.

Christel Sands-Feaste, a partner in the Higgs & Johnson law firm, speaking at a press conference to announce the second annual Eleuthera Business Outlook on April 24, said a number of issues impacting Family Island development and businesses could arise as a result of VAT.

“In the context of development and developers who otherwise would qualify for Hotels Encouragement Act benefits, the fact is that under the current legislation the developers would have to pay VAT, so it nonetheless affects pricing,” she said.

“There is additional cost associated with development in the Family Islands. It’s more difficult to get there, the cost of labour is higher and the the cost of fuel is higher, so it has a knock on inflationary effect.”

Mrs Sands-Feaste said VAT administration could also be an issue in the Family Islands, noting that while the Central Revenue Agency would handle New Providence, this was not the system being proposed for the Family Islands. “I think the proposal is to administer these things through the local administrator’s office, so that is another issue,” said Mrs Sands-Feaste.

“In the Family Islands, people tend to be engaged in a myriad of businesses. It is the exception rather than the norm for someone’s source of income to be one business. In terms of calculating whether VAT is payable on the service they provide, they will likely have to consider a list of businesses, and when you think about what is Vatable, it involves a more complex calculation.”

Mrs Sands-Feaste added that the timing for the rendering of invoices in the Family Islands could also pose an issue for businesses.

“The fact that VAT will have to be paid in 21 days of month’s end will impact the cash flow, which is more acute,” Mrs Sands-Feaste noted.

She said there was a call for greater insight on how VAT will be administered, how it will impact the way businesses operate, and concern on the upward inflationary pressure on prices across the board.

“At the end of the day, the consensus is that there may be some difficulty in passing on all of the VAT to clients, particularly where you are in regulated markets like the tour business or otherwise where there are fixed prices,” Mrs Sands-Feaste said.