The Tribune

By NICO SCAVELLA

Tribune Staff Reporter

nscavella@tribunemedia.net

THE Ministry of Finance will be paying close attention to restaurants and similar establishments seeking to add a 7.5 per cent value added tax on their gratuity rates, Acting VAT Comptroller John Rolle said.

He said this practice would suggest “a deliberate attempt to avoid” the tax.

While not naming any businesses currently engaged in the practice, Mr Rolle, also the ministry’s financial secretary, said the ministry would ensure that paying gratuity at restaurants does not “suddenly become this avenue for a progressive increase in transactions outside the VAT net”.

“We all know we pay on average 15 per cent gratuity on the cheque, so if we wake up tomorrow and gratuity is 20 per cent, 30 per cent, something is wrong,” Mr Rolle said. “So we’re not going to be comfortable if we start to see those sort of trends where the bills start to creep into gratuity, unless that becomes VAT-able, because then that means there’s a deliberate attempt to avoid VAT. So we’re going to monitor and look carefully at how gratuity continues to be treated under VAT.”

He added: “We are going to keep (a) close look on it because the mandatory gratuity that we pay in restaurants and similar establishments, there’s no back charge from those. So we want to make sure we manage that process so that it doesn’t suddenly become this avenue for a progressive increase in transactions outside the VAT net.”

He also said the ministry was in talks over the introduction of a digital VAT application, commonly called an app, that would “allow the average consumer to have more assistance at their disposal when they’re looking at prices for goods and getting prices in the stores so they can see how VAT fits into the prices.”

He did not say exactly when the app would be introduced, however.

Mr Rolle made his statements during a free VAT seminar at the Melia Nassau Beach Hotel yesterday morning.

Earlier this week, State Minister of Finance Michael Halkitis said the government has collected nearly $28m in VAT filings since the January 1 implementation date.

The Golden Isles MP told The Tribune that $11m has been collected from the Department of Customs at the country’s borders and $17m was taken in from large businesses – those making more than $5m in gross sales – during the first filing period.

The deadline for the first filing period was Monday, March 2. Mr Halkitis said more than 90 per cent of registered businesses submitted their returns and payments on time. He said the government is “very pleased” and “encouraged” by the numbers.