The Tribune

BY NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government-appointed Value-Added Tax (VAT) Education Task Force has recommended that qualifying businesses automatically be permitted to use either flat rate or cash-based accounting to calculate their tax liabilities.

The Task Force yesterday said it was advocating this on the grounds that it would simplify the filing/return process for small and medium-sized businesses, plus boost their cash flows.

Under the VAT guidelines,  a business must have an annual turnover of $400,000 or less to qualify for the flat rate accounting scheme, while any registrant whose annual turnover is $1 million or less can apply to the Comptroller to account for VAT using the cash/payment method. 

Andrew Rogers, the Nassau Glass and Bahamas Aluminum Manufacturing principal, said yesterday that the Task Force, with input from the New Zealand VAT consultants, had recommended that the Government  automatically approve businesses who qualify for the appropriate accounting method.

“Obviously that is not our decision to make, but it will make it a lot easier for the merchants and service companies,” said Mr Rogers.

“They are excellent schemes for companies to use. It simplifies the filing of VAT. We have the cash scheme, and if your sales are below $1 million annually, you can qualify for the cash scheme. We also have the flat rate scheme, and that is for companies that are $400,000 and below.

“What is so good about the cash scheme is that basically  you collect the VAT on your sales, and whatever cash you have collected you then pay your 7.5 per cent to the Government in your filing period. You can still take advantage  of all the input VAT, which is then deducted from that amount, but it really simplifies it. Basically when you are doing your filing forms, you only have about five figures to put in and then it comes up with your VAT payment due.”

    Mr Rogers added: “The flat scheme is even simpler. It’s for companies up to $400,000. Under the flat rate scheme, the Government has come up with the figure of 4.5 per cent, and the way that works is you still collect 7.5 per cent from your customers, but you only pay 4.5 per cent of that 7.5 per cent to the Government in your filing period.

“The 2.5 per cent difference is what they estimate as input VAT. The ease of this is you don’t have to keep track of your inputs, so it really simplifies it using the felt rate scheme.”

     Mr Rogers said that under the VAT guidelines, a company has to apply to the Comptroller to use the flat rate scheme.

“We’re recommending to the Government that companies should not have to apply for this,” he explained.

“They should keep it simple, and that if you fall within the regulations of under $1 million in annual sales then you should automatically be granted cash scheme accounting.

“If you are under $400,000 you should automatically be approved for the flat rate scheme. This simplifies it for the small and medium companies.”