HTA in Discussions with VAT Officials :: The St. Kitts-Nevis Observer

Top officials at the St. Kitts and Nevis Hotel and Tourism Association (HTA) are hopeful that recent talks with government VAT officials will lead to a special and lower rate for hotels and other tourism related businesses.

Michael Head, Manager of the St. Kitts and Nevis Hotel and Tourism Association told The Observer a meeting with tourism stakeholders and the government's tax reform team held last Thursday was "fruitful".

"We met with the government officials to again discuss the proposed Value Added Tax system as it relates to hotels, restaurants and other tourism based-businesses in the Federation. Our main concern was the rate at which the VAT would be levied for this sector. The discussions were fruitful and things are looking positive that a special tax rate will be applied to the hotels, restaurants and the like," he said.

He did however stress that no decision had been arrived at regarding the hotel VAT rate since the White Paper, which would outline the proposed legislation for the new tax system including the tax tiers and rates, had not been issued.

Hotels and restaurants currently charge consumers 19% tax on their food and accommodation bills- 9% government tax and 10% service charge. Head said an increase to hotel taxes could adversely affect already cash-strapped hotels and restaurants.

"We've made a plea that the rate as it applies to hotels, not be more than 9%. We believe that anything higher will be a disaster to the industry as hotels would have to raise their accommodation and restaurant rates," he had told this media house in a recent interview.

VAT, a broad-based tax to be levied on goods and services, is scheduled to be implemented on November 1, with the proposed legislation to be taken before parliament in May. Government officials say the new tax system will result in the removal of several existing taxes.

The tax reform team, headed by Edward Gift, is set to initiate discussions and consultations with the business community as well as members of the general public in the near future. The education drive will include the circulation of the White Paper, pamphlets, booklets and posters along with radio and television programs and publications in the newspapers and on the internet.

Although some members of the business community have raised concerns about the implementation mitigation period and possible inimical date of effect, Prime Minister Hon. Denzil Douglas has assured that VAT will result in more efficient collection and less taxation for consumers.

Since he announced that VAT would be implemented on November 1, Dr. Douglas has yet to inform the public as to a rate for the new tax.

"Exactly what rate shall be put on the VAT is still to be determined," he said last week. Other countries across the region have applied a standard VAT rate of 15% with special rates for tourism-based businesses and zero or exempt status for certain goods and services.