The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Resolving all remaining points of potential Value-Added Tax (VAT) confusion is “more important” than the Appeals Commission’s appointment, the Tax Coalition’s chairman yesterday suggesting too little progress was being made on the former.

Gowon Bowe told Tribune Business that the Ministry of Finance’s approach to dealing with all remaining VAT-related matters was “contrary” to what he and the private sector wanted.

Rather than adopt a ‘comprehensive’ stance and deal with all the issues outlined in the Coalition’s 20-page plus document one time, Mr Bowe said the Ministry has elected to tackle individual matters as they arose with the industries affected.

Suggesting that this was “missing the forest for the trees”, Mr Bowe also called on the Government to persist with a combined “carrot and stick” approach to VAT compliance.

The Ministry of Finance, in confirming that the VAT Appeal Commission had been appointed (but not disclosing the names of its members), said its creation was “critical at this juncture”.

In a statement, it hinted that the VAT will start to take a more aggressive approach to enforcement and the imposition of financial penalties on registrants and other businesses that breach the law and accompanying regulations.

Such a move is unlikely to be greeted warmly by many in the private sector, given that they were allowed two months’ transition from VAT’s implementation (until end-February) to comply with key requirements such as pricing.

And the VAT Guidance Notes and other Ministry of Finance materials suggested the Government would adopt a ‘light tough’ regulatory approach for the first six months - with some, including accountant John Bain, calling for this period to be extended to a year.

Mr Bowe yesterday urged the VAT Unit to distinguish between businesses who were taking proper steps to comply, and those that were “defiant” and refusing to fall into line.

As for the VAT Appeals Commission’s creation, he told Tribune Business: “I think that’s secondary to really addressing the open areas that are still causing some confusion.

“That’s [the Commission] part of the process. I don’t think it’s any more important than getting the outstanding open matters dealt with.”

The Appeals Commission will be the ‘first point’ of appeal for any business, VAT registrant or consumer who is aggrieved by a VAT Unit/Ministry of Finance decision.

While not naming the Commission’s members, the Ministry said it would be chaired by a retired Supreme Court judge, with other members including a retired senior Customs officer and an accountant.

They will also sit as the Customs Appeal Commission and, while their rulings on VAT matters can be appealed to the Supreme Court, the Ministry made clear that this could only be done if a ‘point of law’ was being disputed.

Mr Bowe acknowledged that the initial Appeals Commission ‘make-up’ covered a broad “cross-section” of the skills that would be required - legal and accounting knowledge, plus persons that were familiar with duty and tariff matters.

However, the Coalition for Responsible Taxation chairman added that “impartial persons as opposed to VAT experts” were a greater requirement, especially at this early stage when building private sector and consumer confidence in the new tax was vital.

“It’s more an equitable adjudication of VAT disputes - persons with financial and tax knowledge, who can determine the circumstances and who’s at fault and not at fault,” he told Tribune Business.

Mr Bowe suggested that the end of VAT’s first month of life had motivated the Government to establish the Appeals Commission, as it moved to deal with companies that had committed offences such as failing to register; not calculating the tax properly; and failing to display registration certificates and Taxpayer Identification Numbers (TINs).

“I don’t think it’s an indication of increased fines and levies, but increased compliance efforts from the VAT Unit,” the Tax Coalition chief said.

Yet with VAT still in its infancy, he urged the Government to maintain “a give and take” approach.

“It’s still a transition period, and it’s important to balance the stick with the carrot,” Mr Bowe told Tribune Business.

“It still requires incentives for people to comply, but they need to prosecute people who are openly defiant. Persons working properly towards the end goal, or persons paying it no mind - distinguish between the two.”

He reminded the Government that the absence of a VAT communications plan and strategy meant that it could not expect the private sector to be fully compliant from day one.

“There has to be give and take,” the Coalition chief told Tribune Business. “The communications and timelines leave something to be desired, so they can’t be hypocritical in terms of expecting businesses to be properly aligned.”

Mr Bowe added that progress in resolving the private sector’s outstanding list of VAT issues with the Government had been “slow”.

Rather than tackle the Coalition’s all-encompassing list, the Ministry of Finance had been working through them individually with affected industries, “contrary to what I wanted to do.

“What I wanted was a more comprehensive response so we could start populating that list,” Mr Bowe added. “We sometimes miss the forest for the trees in that regard.”

He explained that the current approach of resolving issues individually might lull some officials to believe that, after solving three to four, the rest would go away.

“It’s not a numbers game,” Mr Bowe said, adding that he had spoken to several Cabinet ministers in a bid to speed the process up with the Ministry of Finance.