The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Tax-Coalition’s co-chair has expressed concern as to whether the government will be able to deal with the volume of business who would likely look to become Value-Added Tax (VAT) registrants, noting that the government could face “big problems” if it was unprepared to deal with the volume of registrants.

Gowon Bowe, who is also a PricewaterhouseCoopers (PwC) accountant and partner, noted that New Zealand had faced a similar experience during its implementation. Dr Don Brash, one of two New Zealand tax experts in the country to assess and provide a report to the government on its VAT implementation readiness suggested that most business will want to be registered once VAT is implemented to claim their input credits, noting that in New Zealand’s case the anticipated 120,000 registrants had “very quickly” moved to 180,000.

Mr Bowe pointed out: “In our environment we are saying that we are expecting to have between 4,000 and 4,500 to register . The big concern is if the government is going to prepare for those who see the merit in registering and you now get 10,000 registering or 13,000 registering. If you look at the New Zealand’s example, they said that so many black market or informal economy business registered because their private sector sort of forced them to do so because businesses that were VAT registrants were unwilling to do business with businesses that were not registrants because they were not able to get credits so it was a peer pressure type environment. That forced a large number of business to register.”

“We’re looking at only 20 per cent of our business being registered but what happens if 70 per cent registers. They said that is a big matter the government would have to get to grips with. There could be big problems if you are not prepared for that type of volume. You can’t deny a business from registering. It would be very costly to regulate those smaller business because there is a very small amount of revenue being collected but once you give them the option to register you can’t deny them that and the administration could become very cumbersome,” said Mr Bowe.

Mr Bowe noted that the tax coalition was on track with its economic study. “We’re waiting to get a some final numbers from the government to allow us to more accurately predict certain things. They’re looking at next week to have those numbers to us and the final report will be written in the next 10 days after that. We certainly expect to have our report next month,” said Mr Bowe.