The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Value-Added Tax (VAT) Task Force co-chair yesterday expressed hope that “at least 75 per cent” of quarterly filers would achieve first time compliance, as it targets “a level playing field” among all taxpayers.

Edison Sumner acknowledged that companies due to submit their first quarterly VAT returns and payments on April were unlikely to match the 95 per cent compliance rate set by their ‘monthly’ counterparts for January, but this would not be for lack of effort on the Task Force’s part.

The group is planning to hold filing workshops in Abaco and Grand Bahama within the next two-three weeks for ‘quarterly’ taxpayers, who comprise the majority of VAT registrants.

From there, the Task Force is planning to shift its educational efforts to Exuma and the larger Family Islands, with its workshops “going a little deeper” than those offered by the VAT Department at its current Gladstone Road headquarters,

Mr Sumner said the “greatest challenge” for Family Island VAT registrants was access to reliable Internet and electronic banking services, so that returns and payments could be made on time - and penalties/sanctions for non-compliance avoided.

Businesses without Internet access are being invited to use the administrator’s office on each Family Island to submit their returns, dealing with one half of the problem.

However, Mr Sumner said the Task Force was “disappointed” that several commercial banks did not appear at its last workshop to discuss their electronic banking facilities with the business community.

And he reiterated that April would be the first “significant” test for the VAT Department’s systems, for this is when the bulk of its estimated 6,000 registrants will file their returns - the majority for the first time.

This is because companies with annual turnovers between $400,000 to $5 million will be filing their first-ever returns for the three months to end-March 2015, although some may have opted to remit due VAT revenues to the Government on a monthly basis,

Mr Sumner said that while 95 per cent of the estimated 550 monthly filers had submitted their due January returns, and payments, on time, that compliance rate was likely to be less for quarterly filers.

“I don’t know if we will see the same level, 95 per cent, but I’m hopeful we would at least get a 75 per cent compliance rate,” he told Tribune Business of the quarterly filers.

“I’d like to get 100 per cent, but 75 per cent would be a reasonable return rate, a reasonable expectation for us to have. I’m pretty confident we will see that happen.

“We want to achieve a level playing field, so that all are complying with the rules and we are not just leaving it to a few companies to pay all the tax. I want to see a level playing field for all those registered for VAT.”

Mr Sumner said he expected the 95 per cent compliance rate among monthly VAT registrant filers, those with annual turnover exceeding $5 million, to be a “trend” that continued with February’s filings - the deadline for which is fast approaching.

He acknowledged that April would be “the first major test” of the VAT Department’s system, and added: “I’m satisfied the smaller businesses in the country are taking the steps, and rushing to get prepared to pay and file their submissions in time, so as not to incur any penalties.”

Speaking to the planned Abaco and Grand Bahama workshops within the next three weeks, Mr Sumner said: “The idea is to get to some of the major islands before returns are due at the end of April, so we can assist them in understanding filings before they have to be submitted.

“We are focusing attention on quarterly filers because it’s going to be a significant deal for the VAT Department, having several thousand businesses required to file.”

The Task Force co-chair added that if small and medium-sized businesses “require some hand holding through the process, we are prepared to provide that level of support”.

The Task Force’s workshops, Mr Sumner said, go “a little deeper” than the Government’s education sessions, focusing on the interaction between import tariffs and VAT, plus accounting and the rules/guidance notes relating to the tax.

When it came to the Family Islands, Mr Sumner said the “only complaint” common among VAT registrants was the availability of Internet services and whether these were reliable.

With the Government requiring returns and VAT payments to be submitted electronically, businesses in this predicament are being “encouraged” to use Internet facilities in the offices of Family Island administrators to comply with the tax’s requirements.

“The Government does not want cash or cheques,” Mr Sumner said. “They want electronic banking. If there are challenges with electronic banking [in the Family Islands], these are challenges that need to be addressed, so businesses are not challenged in making payment and suffer penalties.”

The Task Force invited Bahamas-based commercial banks to give presentations at its last workshop, but Mr Sumner said: “We were disappointed that one or two banks did not show to discuss with their clients how their systems are set up, and made ready for their customers to use them.”

He added that Task Force member Gregory Bethel, a senior executive with Fidelity Bank (Bahamas), was liaising with the commercial banking sector to determine the readiness of its electronic banking services for VAT purposes.