The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian small businesses are “under 5 per cent ready” to handle Value-Added Tax (VAT) from an accounting perspective, a leading sector consultant warned yesterday, adding his voice to calls for an implementation date push back.

Mark Turnquest, of Mark A. Turnquest Consulting, told Tribune Business that all the businesses he advised, and which would have to register to pay VAT, were “confused” about how to treat the tax in their accounts.

Pointing out that “99 per cent” of small and medium-sized businesses with turnovers above the $100,000 VAT registration threshold used simple QuikBooks accounting systems, Mr Turnquest said they badly needed advice from both the Government and professional accountants.

He also suggested to Tribune Business that the Government initially introduce VAT via some form of trial or ‘pilot programme’, so that the private sector and Ministry of Finance could ensure it was functioning correctly prior to full implementation.

Given the conflicting reports on VAT’s potential impact, at both the macroeconomic and individual business level, Mr Turnquest said he did not “feel confident” about supporting the Government’s fiscal reform centrepiece.

“All of us are confused as to what to go on,” he told Tribune Business. “Establish a pilot programme and see how the operation of VAT takes place.

“The July 1 deadline is not an adequate or good date, because right now the small business owners I have spoken to are not ready. All of them said they’re under 5 per cent ready. None of them are ready in terms of setting up their accounting systems.”

Mr Turnquest explained that his small business clients with annual turnovers above the mandatory VAT registration threshold, between $100,000 to $300,000, were currently assessing where they could apply the tax as a QuikBooks line item.

“They don’t have sophisticated accounting systems to see where they can apply that 15 per cent,” he said. “I want the Government to know 99 per cent of small businesses who are making between $100,000 to $250,000 a year are using QuikBooks accounting.

“They are seeing where they can apply VAT as another line item under VAT. My advice to government is to have accountants tell those small and medium-sized business owners, making $300,000 a year at most, how to apply VAT under QuikBooks accounting and whether to put it under costs or expenses.”

Mr Turnquest said he was working with accounting contacts to help provide advice and training to the Bahamian small business sector.

“From my experience, and I am on the ground, the Government needs to advice people registering to pay VAT to show them, from an accounting perspective, how to apply VAT when purchasing merchandise from a person charging VAT on them,” he added.

“The Government needs to provide accounting services education on whether to apply VAT above the line, before you pay expenses, or below the line, after you pay expenses.”

“You don’t have no model or type of understanding as to how the Government wants us to remit VAT and adjust your accounting,” Mr Turnquest said.

“They need to definitively show business owners in services, merchandise and manufacturing how to comply, when they have VAT as a cost and VAT as an expense.

“Right now, a lot of these individuals don’t know how to do it. How are they going to get any refunds back from the Government? Show these people how to exactly apply accounting methods.”