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VAT readiness: PM warned that 'Clock ticking'

Gowon Bowe

Gowon Bowe

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Prime Minister Perry Christie has been warned that “the clock is ticking” on the private sector’s Value-Added Tax (VAT) readiness, a Tax Coalition co-chair yesterday calling for the revised legislation and regulations to be published “as soon as possible”.

Gowon Bowe told Tribune Business that the Coalition for Responsible Taxation was “not resting on our laurels”, with almost a month having passed since Mr Christie unveiled the revised VAT proposal in his 2014-2015 Budget address.

There has been no subsequent indication of when the Government will release the revised VAT Bill, and accompanying regulations, guidance notes and full Tariff Schedule, to both inform and consult with the private sector and wider Bahamian public.

With just over six months to go before the January 1, 2015, implementation date, Mr Bowe told Tribune Business it was “hugely important” that the VAT details were released immediately to give businesses the maximum possible time to prepare.

Suggesting that companies with large inventories, pre-existing contracts and high accounts receivables would need the longest lead-in time, the Coalition co-chair again urged the Government to follow New Zealand’s lead.

That nation released its VAT legislation and accompanying documents prior to their passage into law, and Mr Bowe said that if the Bahamas followed suit it would ensure there was “a no surprise” law even if some details were ultimately changed late on.

Mr Bowe, a PricewaterhouseCoopers (PwC) Bahamas accountant and partner in his ‘day job’, said there were “three primary things” that the private sector and individual Bahamians needed to see.

Apart from the VAT Bill and regulations, he said the Government needed to release the full, revised Tariff Schedule and the ‘guidance notes’ showing how it was “interpreting” the new tax in practice.

Finally, Mr Bowe said the Christie administration needed to appoint separate Steering and Implementation committees, the former dealing with how the legislation and regulations will work. The latter would handle the education effort.

“We’ve not rested on the laurels,” Mr Bowe told Tribune Business. “We’ve sent a note to the Prime Minister saying you’ve cleared one hurdle - some of the elements, what the rate will be and the description of VAT with fewer exemptions.

“We now need to get back to details, and we did remind him that the clock is ticking.”

Mr Bowe added that there had been little mention of VAT since the Budget was passed in the House of Assembly, with the Government now seemingly focused on gaming - both the casino variety and web shop legalisation - as the next priority item on its legislative agenda.

“That’s not conducive to getting the legislation and regulations in the public domain in the quickest possible time, so there’s still a lot of work to do,” Mr Bowe said.

“We said from the very beginning, even before we had produced those studies, that businesses have to have a reasonable time to digest the legislation and details.”

He added that “even though they may be able to get their heads around the concept behind it [VAT]”, Mr Bowe said companies needed time to adjust their systems and internal controls, plus determine if they needed extra staff to perform VAT-related functions.

“The transition provisions will be huge for people with inventories, long-term contracts that span pre and post-VAT, and those with receivables that include bad debts,” the Tax Coalition co-chair added.

“From that perspective, it’s hugely important to have this out with the business community as soon as possible.”

Mr Bowe said tourism and the hotel industry were among those sectors eager to see the VAT details, given the uncertainty over how Promotion Board fees and advertising costs will be treated.

He added that it was impossible to guess what the Government’s timetable for the VAT legislation release was, although there had been indications the Ministry of Finance had made the necessary amendments. It was unclear if these changes had been presented to the full Cabinet.

Mr Bowe said the Bahamas needed to follow New Zealand’s lead, with that country having released its draft legislation six to nine months in advance of coming into law.

Its private sector-led Steering Committee was able to field 1,000 VAT-related questions, separating genuine concerns from the myopic, while businesses were able to prepare.

“Every industry would like to have clarity by virtue of legislation and regulations, even if they’re not passed in the House,” Mr Bowe told Tribune Business.

“Even if legislation is passed later in the year, it will be ‘no surprise’ legislation. Everyone’s prepared, not everyone’s pleased, but you should have greater consensus.”

Comments

Well_mudda_take_sic 10 years ago

WORTH REPEATING: This guy Bowe really needs to have his head examined. As much food as he apparently consumes given his size, he more than most should know what inflation has been like at the grocery stores in anticipation of VAT, not to mention what it will ratchet up to if a VAT of any amount is actually introduced by our lamed brain government of the day. Bowe appears to be so enamoured by mathematical VAT models of one kind or other that he just can't see the forest for sake of the trees. One only has to look at how far off the mark KPMG's models were when it came to the inflationary effects of government granting a monopoly to the Nassau Container Port at Arawak Cay (APD) to understand that Bowe must be speaking with his tongue pressed hard against his cheek. He's beginning to sound more like a daft politician rather than a businessman who truly has the interest of Bahamians at heart when it comes to the future economic well being of the Bahamas. Notice that he never persistently presses the more important issues like reducing the size of government, ending privatizations of government corporations based on the granting of private sector monopolies, prosecuting the numbers' bosses and confiscating their illegally obtained assets for the benefit of the Public Treasury, prosecuting tax cheats, especially MPs, Senators and their business cronies who have not paid their real property taxes, business license fees, National Insurance contributions, and so on. Bowe is content to have us believe that we should just sit back and accept a VAT when we know full well a VAT of any amount will only be misspent by our incompetent government (whether FNM or PLP) to buy votes come election time and do absolutely nothing towards reducing our national debt. We are not fools Mr. Bowe......take your head out of your mathematical models and focus your efforts on the reality of the situation....we need an entirely new political party made up of intelligent hard working Bahamians who care more about the country than themselves and who can get elected without bribing the illiterate voters in their constituencies....WE DON'T NEED TO HAND MORE TAX DOLLARS OVER TO THE SPENDTHRIFT BABOONS WHO HAVE BEEN ON AND OFF IN GOVERNMENT SINCE 1992, whether they be FNM or PLP.

TheMadHatter 10 years ago

I'm sure that the lack on information on VAT from the Government means that they have simply abandoned the idea altogether, and prefer to sit back and wait for our currency to be devalued.

No, I'm not being sarcastic.

TheMadHatter

John 10 years ago

Most businesses do not have a clue of what they will be rrquired to do to become VAT compliant in January 2015. What they do know is the 7.5 percent tax added to the cost of their goods plus the added cost of VAT accounting may mean that many small and medium businesses may close by June of next year. Some of these businesses have not seen a profit since the recession started in 2008 and even though those who were promised some relief from the losses they suffered due to the roadworks, only few recieved any benefits. In fact a number of business owners were compelled to sign payment agreements with BEC and National Insurance and with the Ministry of Finance for outstanding bills and property tax on their businesses and their homes. Some business owners feel they will not be able to live up to these agreements and will have to close down in a matter of months if the economy doesn't improve and it gets worse as exprcted when VAT kicks in.

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