THE government’s plan to prevent VAT “double taxation” was branded “impossible and not practical” by the private sector, its Tax Coalition co-chair warning that businesses will refuse to comply.
And, Robert Myers told The Tribune, the government is increasingly taking “a very dictatorial position” on key aspects of VAT implementation, and is seemingly uninterested in the private sector’s alternative proposal.
He disclosed that instead of the government’s plan to establish bonded warehouses, the private sector had proposed a certified inventory audit at around the implementation date – currently July 1 – with companies receiving a tax credit on sales of this stock.
This would prevent Bahamian companies being hit by the “whammy” of higher pre-VAT Customs duty rates and the new tax’s 15 per cent levy, ensuring sales post-July 1 only attracted the newer, lower border rates.
The government has proposed bonded warehouses to achieve the same results, with these operating for three months – two months prior to VAT implementation, and one post.
However, private sector executives have warned that this solution is not practical for industries such as the auto sector, which are on four-five month ordering cycles, and others who are buying in bulk from markets such as Asia and Latin America.
“It’s unacceptable. The business community won’t accept it,” Mr Myers told Tribune Business of the bonded warehouse goal. “It can’t happen in a business system. There’s no possible way to do what they want us to do.”
• See Tribune Business for full story.
Comments
John 10 years, 9 months ago
This Vat thing seems to be complicated...some people are already thinking about closing their businesses until they get a clearer understanding about it.
paul_vincent_zecchino 10 years, 9 months ago
When something seems complicated, baffling, difficult to comprehend regardless how many times it is explained, that's typically because it's not on the level.
For decades, it was well understood that the Bahamas were prosperous precisely because of their light tax structure.
No society ever taxed itself into prosperity. Quite the contrary.
John 10 years, 9 months ago
Can someone answer this question Lets say a small barbers shop or beauty saloon. They are under $50,000 I sales per year. So they are not required to register. So what happens when they charge their customers vat on ay a haircut. How does this money get back to government?
ohdrap4 10 years, 9 months ago
They are not supposed to charge VAT. But they are free to increase their prices at will. They will absorb their VAT expense as an overhead expense, like electricity, rent, etc...
The_Oracle 10 years, 9 months ago
The barber shop example not being a VAT registrant, cannot charge VAT on services, but will pay VAT on supplies and services they use. The Barber shop can voluntarily become a VAT registrant, in order to Charge VAT and then be able to claim back VAT credit against VAT paid on supplies and services used.
As to the article subject, the Government "bonded warehouse" facility assumes 100% inventory turn over in a 90 day period, very unlikely in the Bahamas in part due to shipping lead times and shipment consolidation. Most Merchants operate on the Mercantile system, buy bulk for price benefits, warehouse it, it will sell eventually. The U.S. and most sales/VAT tax jurisdictions moved decades ago to Just in time Inventory, and efficiency of order point logistics. Being a relatively small Consumer nation, minimum order values from manufacturers usually force most businesses into the middle man supplier for smaller quantities, including the seconds market for textiles.
There is much information needed by but not available to the IMF, Government, and proponents of VAT. VAT gives them total overview of the domestic economy, drilling down to fine detail, allowing assessment for other forms of taxation. (Income, Corp, Personal, Bus, etc)
B_I_D___ 10 years, 9 months ago
Barber shop ripple...so...you are under the threshold to where you need to actually register...what is to stop you from adding VAT on ANYWAYS, take another 15% from the customer, they don't know that at the end of the day you are not submitting that back to the government...do you really think we will have that good of a checks and balances in place to catch people sucking 15% out of the end user 'illegally'...just a thought. Not that I would suspect ANYONE of every trying to be that deceitful...never....
MartGM 10 years, 9 months ago
The registration list will be available to consumers. There will be a bit of due diligence on the consumer's part though. If you feel the supplier shouldn't be charging VAT then you'll need to check to see if it's registered. If it isn't registered, then you file a report/complaint and the investigative arm of VAT revenue collections agency (not sure of the true name) will investigate the matter. For some that will be as simple as using their smartphones to go on the website while in the stores to see if it is in fact registered and report if need be. However, I know many others will be robbed because they either don't care or will be ignorant to the entire process.
I also understand that businesses will have a some visible tangible document in place so customers will know that this business is a VAT registrant.
ThisIsOurs 10 years, 9 months ago
Good luck with registering any complaint and getting it addressed in a timely manner and pray the business owner isn't a relative or adulteress in relationship with a government official
MartGM 10 years, 9 months ago
A report was already filed against a bar that was literally charging VAT (it appeared on the receipts). The investigative unit looked into it and corrected the issue.
This is just information I received from attending a few of those town hall meetings on VAT...
Guy 10 years, 9 months ago
Just as businesses are required by law to display their business licenses, VAT registrants should be required to display, in an open and visible manner, their VAT registration certificate and number. Otherwise a client can refuse to pay a single cent in VAT.
John 10 years, 9 months ago
Well I see a whole lot of services 'going vat free' like the barber shop so the government will still be missing out...like gardeners and handymen and the maid that works in home, or bush mechanics or the guys that clean fish on the dock, or who clean your car...most of these people are making less than $100,000 but it is many of them that provide probably millions in services annualy, but the government will not get any VAT from therm...hmmm interesting..
John 10 years, 9 months ago
I am also lost on the bonded warehouse and the 90 day time frame. Food stores, for example are required to turn over their inventory 13 times a year to be efficient, while a clothing/department store only turns its inventory 1 and a half times a year. A restaurant can turn its inventory over almost daily and a car lot may take 3 years to turn over its inventory. So how will this fit into the 90 day bonded warehouse time frame? Or is this mixing apples with oranges?
Tarzan 10 years, 9 months ago
Just ask the Certified Fraud Examiner who has never run a business; who has never managed an inventory and who looks at neat columns of numbers on pieces of paper all day. "Nevermind, nothing to see here." What an idiot.
paul_vincent_zecchino 10 years, 9 months ago
The more punitive the taxes, the more businesses go underground. The Underground Economy is what kept the soviet union going for seventy years.
The more people are taxed, they more they do as they did in soviet union. Every day, they try to figure out ways to beat the system.
A prosperous society is lightly taxed.
sheeprunner12 10 years, 9 months ago
Hey Paul......... whose economic theory is that??????????????
How do you account for US, Canada, Japan and EU with their tax structure????????
Based on your view name three countries that qualify by your criteria.
ohdrap4 10 years, 9 months ago
the economic theory that does not get published in books.
In Paraguay, there is a huge underground market, you buy everything on the street, or order things from your home. Want a refrigerator, order it and it gets delivered.
I once knew a jeweler, really, a jeweler, who sold house to house. the customer would describe the item, he would come to deliver, riding the bus and carrying it in his pocket, expensive 18k gold stuff. Then I asked, how fo you fill your tax return. He tells me that when he sold the diamond ring, he would give away low grade 8k or 10k gold trinkets to the customer-- those were the items on the invoice!!!! He died a millionaire, but always looked poor.
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