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9TH SEPTEMBER 2005
MEDIA RELEASE
VAT REGULATIONS

The Private Sector Commission (PSC) on Tuesday September 5th, 2005 presented its comments to the Minister of Finance on the Draft VAT Regulations which were released to the public for review and comments.

The PSC pointed to a number of Regulations in the Draft which are vague, ambiguous and in need of proper definition and clarification. In a number of instances, words like -‘substantial’, ‘documentary proof’, ‘is expected to’ - are embedded in phrases which are in critical need of clarity and appropriate explanation to bring a greater degree of certainty to what is intended. Regulation 2, which deals with ‘definitions’, provides explanations for only three words/phrases.

The PSC expressed concern that a number of the Regulations leave much to the discretion of the Commissioner General of the GRA whose powers are wide and thus open to abuse. The issues of refunds, waivers, exemptions, information to be provided and audits were identified as key areas in this regard. Uncertainty on these issues can significantly affect the cash flow of businesses.

A major issue of concern to the PSC is that, even at this stage, the rate of VAT is not specified. So too is the ‘threshold’ level for businesses which would be required to register as collectors of VAT and the lack of any provision for relief on taxes paid on goods on hand at the implementation date of VAT. This can result in short term inflation. The PSC had earlier called for these issues to be settled but has been told that the requisite studies, which should have preceded the legislation to establish these levels, are yet to be completed. In addition, the Excise Tax requires by way of Regulations, the

Private Sector Commission

identification of a list of taxable goods and the rate of tax to be charged on these goods. The PSC has been informed that these regulations have not yet been completed.

The PSC also expressed its disappointment at the nature of the consultations which have so far taken place. The PSC had earlier made a detailed 85 page submission to the Special Select Committee of Parliament on the VAT Bill, but most of its recommendations were ignored without the courtesy of any explanation or feedback. Similarly, at the consultations on the VAT Regulations which were held by the Ministry of Finance on August 31, 2005, answers to some questions posed by the PSC were ignored with no reason(s) forthcoming.

The public was informed by the Minister at the consultation that no consideration was given for the PSC to be represented on the VAT Steering Committee. The PSC finds the reasons given totally unacceptable and callous since the PSC is the national body representing the business community which will be responsible for the collection and remission of VAT.

The PSC reiterated to the Minister its commitment to work with his Ministry in ensuring that the implementation of VAT is carried out with minimum disruption to businesses and in this regard, emphasised that it is imperative that the many concerns identified in its several presentations on VAT implementation must be addressed.

The PSC has repeatedly advised that the implementation of VAT must not be rushed, but done within a realistic timeframe allowing for the proper development of the regulations, the education and preparation of the business community and the general population.