The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Tax Coalition’s chairman yesterday urged the Government not to adopt a “sledgehammer approach” to Value-Added Tax (VAT) compliance, but agreed it was “fair” that businesses be liable to pay the tax on sales where it was not charged to consumers.

Gowon Bowe said most Bahamian businesses would not take exception to the Ministry of Finance’s latest VAT clarifications and warnings, which largely dealt with correct tax calculations and the display of ‘inclusive pricing’ signage.

When it came to retailers displaying VAT ‘inclusive pricing’, the Ministry of Finance said its warning letters would be replaced by fines “later in January”.

It added that it was also issuing warning letters to companies that were levying the wrong amount or percentage of VAT, adding that consumers were entitled to refunds if this exceeded 7.5 per cent.

The Ministry of Finance made special reference to the case of Mario’s Bowling and Entertainment Palace, which The Tribune revealed this week was charging customers a 10 per cent ‘gratuity’, even though the receipt described this as a ‘tax’.

While confirming that the Ministry’s concerns were valid, Mr Bowe also urged the Government to adopt a “formal” mechanism through which it would notify the private sector of any changes to VAT Rules and regulations, so that businesses did not fall victim to “hearsay” and made mistakes that could prove costly.

“The main thing is, and I have a made a recommendation to the Ministry of Finance, to have a formal notice mechanism on how any changes in the Government’s position, and amendments to the VAT Rules, will be announced and communicated to avoid what is taking place now,” Mr Bowe told Tribune Business.

“There are still cases where businesses are hearing they may not have to charge VAT or deducting a particular element before they charge VAT.

“Any change in the Rules, the regulations has to be communicated through a consistent mechanism so persons know, in the absence of that, to ignore anything else and know it’s only hearsay.”

Mr Bowe said such complications arose among retailers, and the petroleum industry, on January 1.

He added, though, that while there may be some “push back” from the petroleum industry, it was “a fair statement” that if “businesses didn’t get it straight” they would be liable for any VAT due on their sales - but not charged to consumers - from January 1 onwards.

“Any business behind the ‘8 ball’ has to acknowledge responsibility for the tax they’re not charging,” Mr Bowe told Tribune Business, noting that a number of Bahamas Federation of Retailers members were calculating VAT manually while IT system changes were made and tested.

Rupert Roberts, Super Value’s president, previously said his firm would pay the VAT due on New Year’s Day after IT system problems prevented the supermarket chain levying it on consumer bills.

Mr Bowe, meanwhile, said he had not heard of many instances where VAT registrants were charging the incorrect amount of VAT and had to refund the difference to customers.

And “it was clear from the get go” that retailers had to put up in-store signage related to VAT ‘inclusive pricing’, even though this might cause further confusion among consumers.

Still, the Tax Coalition chairman called on the Government and its VAT Unit to continue with a “give and take” approach to the private sector when it came to enforcement/compliance in the tax’s early days.

“I hope the Ministry’s approach to compliance is not a sledgehammer, but a case by case basis and that they issue compliance notices,” Mr Bowe told Tribune Business.