The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The BAHAMAS Society of Engineers (BSE) president yesterday said there was still much confusion among industry professionals over how Value-Added Tax (VAT) should be applied to contracts and receivables.

Speaking with Tribune Business after a VAT presentation at the BSE’s monthly luncheon, Mr Bethel  said: “There are still a lot of questions, and there is still a lot of confusion that exists out there in the marketplace, but we want to make sure that we get things right.”

VAT Unit officer, Benjamin Miller, who led the presentation to the BSE, outlined the various requirements under the VAT regime relative to registration, how the tax is calculated and how invoices should be constructed.

 Mr Miller said contracts that span pre and post-VAT implementation are taxable  only on the portion of the contract executed post-VAT.

“You should be sending your client the VAT amount of that incomplete portion or the portion of the job coming into 2015,” said Mr Miller.

He added that some businesses have approached various professionals prior to VAT to pay for work, knowing that the job would not start until 2015.

“That entire bill becomes VATable and that goes as far back as July 1, 2014, so someone who tries to pay for a contract in 2014 and they know the service won’t be delivered in 2015 because they are trying to avoid paying VAT, that service will be subject to VAT,” Mr Miller said.

“A lot of businesses have accounts receivables, and some have been threatening customers saying that if they didn’t pay by December 31 they would be charging VAT on the balance. That is incorrect; you cannot do that.”

Mr Bethel, meanwhile, said: “I think that there is obviously still a lot of confusion that exists out there in the marketplace on how various service providers are going to apply VAT on the areas where VAT is to be applied, particularly how to bring forward from last year services that began last year and will spill into this year in the VATable period.

“There were obviously a lot of questions that were asked in this session. Without a doubt we’re going to need the VAT team to come back again later in the year, when it’s time for these various businesses to file their returns. A lot of mistakes are going to be made.

“There is till very much a learning curve and we are going to need the VAT team to exercise some discretion and leniency while everyone becomes familiar with the requirements.”