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Narrowed Vat Filing ‘Less Onerous’ If Govt Sees Bigger Picture

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s decision to press ahead with narrowing the Value-Added Tax (VAT) payment window by seven days will be “less onerous” if it meets its due obligations to the private sector, the Chamber of Commerce’s chief executive said yesterday.

Edison Sumner told Tribune Business that timely refunds, and the ability to obtain Tax Compliance Certificates (TCCs) without delay, would make it easier for the private sector to accept a reduced VAT filing/payment period.

He added that the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) was now set to “take the pulse” of the business community on the issue, after the Government decided to move forward with amendments unveiled with the 2016-2017 Budget.

The Department of Inland Revenue, in an e-mail issued to the 6,000-plus VAT registrants yesterday, confirmed that the time companies have to file their returns, and submit payment, will be cut from 28 days after the reporting period ends to just 21.

“The Department of Inland Revenue wishes to advise all taxpayers that effective January 1, 2017, the deadline for VAT filing and payment will change,” said the e-mail, obtained by Tribune Business.

“Registrants must now file their VAT returns and remit any VAT due within 21 days after the end of each tax period, in accordance with the VAT (Amendment) Act, 2016, Section 47, Subsection (1).”

The warning/threat was not far behind. “Please ensure that all VAT returns are filed and paid by the new deadline of the 21,” the Inland Revenue Department said.

“Failure to file and make payment on or before the deadline will result in fines and penalties being assessed.”

The ‘narrower’ VAT payment window was among the private sector’s major concerns following the Prime Minister’s Budget address in late May.

Mr Sumner yesterday said the issue had been raised in subsequent meetings with Simon Wilson, the Ministry of Finance’s financial secretary, and his team, and the Chamber had been waiting for the Government to announce a formal position before it took further action.

“We’ve had occasion to have several meetings with them regarding the plans they have to make amendments on the filing and payment of VAT,” Mr Sumner told Tribune Business.

“We would have presented our concerns in those meetings with the Government officials. We have put the information out to the private sector and our members.

“It is something we are going to the pulse of members on. We were waiting to see what the Government’s final position is. We have to speak to our members to find out how they feel about shaving seven days off the payment.”

Mr Sumner said the Christie administration’s decision to ‘narrow’ the VAT payment/filing window was linked to its desire to improve government cash flows, and ensure it can meet its multi-million dollar monthly obligations.

“The Government wants to change its cycle for the payment of VAT,” he reaffirmed to Tribune Business. “It’s to do with the revenue process, and to be sure that they get the revenue in a more timely fashion to meet monthly commitments and obligations.”

The ‘narrowed’ VAT window, together with the recently-announced ‘offensive’ against major tax evaders and delinquents, will add to the growing impression that the Government is enduring significant cash flow difficulties and is desperate to gain every cent of revenue due to it.

Mr Sumner said the Chamber planned to “quickly” provide feedback from the private sector to the Ministry of Finance on the reduced VAT filing/payment, and argued that any reforms should be implemented “holistically” and take account of “the whole picture”.

He suggested that the narrowed ‘window’, and the extra costs and bureaucratic burden it might impose on some VAT registrants, would be easier to absorb if the Government delivered on its end of the bargain.

This, Mr Sumner explained, meant ensuring that businesses could obtain timely TCCs from the Government, thereby ensuring they can obtain payment for services already rendered to it.

And it also requires the Government to pay VAT refunds within the same time periods they are demanding of the private sector for tax filings and payments.

“When we talk about adjusting the VAT filings and payments, we have to look at that holistically and how it impacts those companies doing business with the Government, and requiring TCCs to get payments due to them,” Mr Sumner told Tribune Business.

“When we look at making adjustments in the payment periods for the filing of VAT, we have to look at the whole picture.”

Mr Sumner acknowledged that “many companies” may have concerns with the reduced VAT payment window, adding: “It’s going to possibly impact cash flow, even though it’s the Government’s money.

“They’ve got to make provisions to file those returns earlier than they’re doing, so those companies may have to make revisions to their payment systems and operating systems.”

The Chamber chief, though, added that “the real issue” would come when VAT credits and refunds were due to registrants.

“When are we going to get refunds applied to our accounts?” he asked rhetorically. “The business community may say they have no difficulty paying in 21 days, but if the Government is paying reimbursements and refunds of VAT credits, how quickly will those be paid?

“If they’re able to satisfy that requirement of the business community, any change will be less onerous and better accepted by the business community.”

Mr Sumner acknowledged that the “cries are not as loud as before” on TCCs and VAT refunds, and he urged impacted businesses to contact the Ministry of Finance with their complaints, given that it had pledged to address all issues on “a case-by-case” basis.

Comments

John 3 years, 6 months ago

The government is surely turning the screws on businesses to make the environment more hostile, more difficult for Bahamians to do business and damn near impossible for small and medium businesses to realize profits. When Donald Trump won the election and maintained his stance that he will be reducing taxes on businesses, the Dow Jones broke the 1900 mark and has been setting records since. Here this blindfolded government is getting more than 50% taxes on some businesses and is still looking for more ways to milk the cow. Does it not realize that we now live in a global economy? many consumers need only a smart phone to go online and beat overtaxed prices in the Bahamas, especially on retail items. Their insatiable appetite for more tax revenue may eventually lead to them seeing less tax revenue.

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DDK 3 years, 6 months ago

Government (in its own bubble) may or may not realize what a burden this VAT is putting on Bahamian retail business. One thing is certain, IT DOES NOT CARE....

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