The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Customs Department is forecast to collect an average $15 million per month in ‘border’ Value-Added Tax (VAT), a Cabinet Minister pledging the Government would not increase the 7.5 per cent rate “any time soon”.

Michael Halkitis, minister of state for finance, said the Customs Department collected just under $11 million in VAT at the border during January.

Mr Halkitis, who was one of three panellists at last week’s College of the Bahamas (COB) Alumni Leaders panel discussion on the new tax, added that Customs had also deferred collection of another $5 million in VAT due from the likes of hotels and manufacturers.

“So far in January, Customs has collected in VAT at the border just under $11 million, $10.9 million to be exact,” said Mr Halkitis.

“They estimated that over the course of the year they will average about $15 million per month, which takes us to $180 million per year from Customs at the border and, of course, we just have to net out reductions in Customs duties to see the end increase.”

He added: “They [Customs] have deferred an additional $5 million, and deferrals are for the likes of hotels who, are under Heads of Agreements, and manufacturers under the Industries Encouragement Act, can defer the payment of the VAT.”

Mr Halkitis said the VAT implementation process has been smooth to-date. “Our advisors, who have done this in other jurisdictions, tell us that it’s been very smooth,” he added.

Mr Halkitis reiterated that VAT’s introduction was only part of the Government’s overall fiscal reform effort, with spending constraint, improved revenue administration, economic growth and new revenue streams also key areas of focus for the Christie administration.

The Minister said that although the Government had anticipated 4,800 VAT registrants, just over 5,800 businesses have completed the process to-date. Companies with an gross annual turnover over $5 million have to submit monthly VAT returns, with the end of January marking the first filing period.

Mr Halkitis said 300 companies fall into that category. Businesses with an annual turnover between $400,000 and $5 million are required to file quarterly VAT returns, with registrants earning less than $400,000 in annual sales having to file twice yearly or once every six months.

“We have just appointed a VAT Appeals Tribunal, so if you are a business and have a complaint against the VAT Unit, you can go to an independent VAT appeal tribunal,” Mr Halkitis said.

“There is a retired Supreme Court justice, a retired senior Customs officer and a retried senior accountant. We haven’t made the official announcement yet, so I won’t call the names. They will be independent of the Government, and if you don’t like what they have to say then you can go to the Supreme Court.”

Mr Halkitis said the Government would not be looking to increase the 7.5 per cent VAT rate anytime in the near future, adding: “I could tell you definitely that we won’t be raising the rate any time soon. Some people have the fear about that. That’s not our intention at all.”