No Major Issues Anticipated For VAT Removal by Staff Reporter
The Tax Office is anticipating a reasonably smooth transition to the removal of VAT from food, medicines and funeral expenses, come next week Tuesday (April 7). Prime Minister Hon. Dr. Timothy Harris made the VAT removal announcement last Wednesday. “We envision that the retailers and the supermarkets would have everything in place by April 7 th , however persons should expect there may be some slight teething problems with regards to the implementation…by the retailers and the supermarkets because of the extensive list, but…the government and the supermarkets are committed to ensuring that the savings are passed on to the customers, so we expect that this will be in place by April the 7th,” says Comptroller of Inland Revenue Edward Gift. “This refers to all food designed for human consumption, and that would include for example all food items, cereals, sweets, beverages, confectioneries, everything of an edible nature, including for example seasoning preparations, Milo, Ovaltine…” The Comptroller said as we do not live in a perfect world there would be some very minor issues in terms of the execution of the policy, but fully expects that “99 per cent of the adjustments would be made by the resellers of the food items”. The Comptroller assures that despite reports that it would take a while for prices to reflect the removal of VAT, consumers will see the reduction in prices from the first day of implementation. “The price decrease in terms of taking off the VAT that they [businesses] collect, would be an immediate thing,” he said. He said once a person is registered for VAT, when they pay the VAT and file their tax return, regardless of if the goods are sold or not, they claim a deduction from the government in terms of the VAT collected. So from a registered VAT business, they never pay over their total VAT collected, it is always the net amount: total VAT collected from the government, their VAT paid… and they pay the net difference. Gift pointed out that the government has put processes in place to ensure that the cost that persons paid up front would have been netted out to them. Monitoring efforts meanwhile, will be done in conjunction with the Ministry of International Trade and Consumer Affairs, the Comptroller says. “They would be the main agency that would be responsible [for] ensuring that cost saving to the consumers from the removal of the VAT is passed on.” He consumers to report any suspected infractions. “They could make a report to the Department of Consumer Affairs, also officers of the Inland Revenue Department would be available to take information, but that information would in turn be passed on to the Consumer Affairs, and they are the ones who would be the active monitoring agency on behalf of the government.”