The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Tax Coalition co-chair yesterday praised the Government for a seemingly “awesome” job with its ‘big picture’ Value-Added Tax (VAT) adjustments, and eliminating the “nightmare” of intra-group reporting.

Robert Myers told Tribune Business that the Christie administration appeared to have granted the private sector’s request for “the minimum number of exemptions” under a 7.5 per cent Value-Added Tax (VAT).

The VAT package unveiled by the Government yesterday eliminated all ‘exemptions’ for goods, and will apply this treatment to only a few select services - financial services’ loans and savings products; the sale or rental of residential real estate; the sale of vacant land; education; and public health services.

And, in a further boost to the private sector, the Government has also enabled corporate groups to eliminate “the need to recognise input and output taxes on intra-group transactions”.

The Christie administration is now allowing groups, with multiple subsidiaries, to register as one entity - enabling them to use a single VAT account and file consolidated VAT returns.

This will benefit the likes of BISX-listed AML Foods, and Mr Myers told Tribune Business: “We were pushing for this. It just made it a nightmare.

“If one company in the group is doing something for another company, and it’s taxed, it just escalates the cost to the end consumer. If it’s just charged on the output, then it just makes it easier. That’s positive.

“Where you have in-house accounting and in-house IT, where they’re related companies, not having to charge VAT on those related transactions makes it a whole lot easier to manage.”

Mr Myers, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, backed the Government’s move to permit tax credits once bad debts were recognised.

It had previously proposed allowing these only when collections efforts were exhausted, something that many businesses feared would negatively impact their cash flows.

The Government, in its explanatory notes on the VAT changes, said this would create “fewer hurdles” for companies with annual turnovers exceeding $400,000. And VAT registrants with gross sales below this sum were already protected by the cash-based accounting system they will be allowed to use to calculate their tax liabilities.

“It’s a big deal for the wholesale industry, construction and the services industry, as they’re all challenged with bad debts,” Mr Myers said. “They’re all doing invoices ahead of getting paid, so it has a big impact. We were pushing for it.”

The Government’s decision to give VAT monthly filers, namely those businesses with an annual turnover exceeding $5 million, an extra week - a total 28 days - to file their returns.

Mr Myers said companies would be “doing something wrong” if they could not hit the extended deadline, and also applauded the Government for slashing the waiting time for monthly VAT filers to request net credit refunds to two from six months.

And sellers of zero-rated supplies, who will always be in a “net credit position”, will be able to claim their refunds at the same time as they file their VAT returns. Both moves are again designed to boost business cash flow.

“It sounds like they’ve really listened and acted accordingly. I’m encouraged,” Mr Myers told Tribune Business.

“It sounds like they’ve been very, very sensible. These are all things that make it much easier to comply. If that happens, compliance will go up and we want as broad a tax base as possible.

“I’ve got no ego in this. I just want to make sure we’ve got the right legislation and regulations. The macroeconomic stuff appears to be headed in the right direction. It’s good to see that they’ve acted in the best interests of the private sector, the public and the Government.”

Mr Myers said some of the Government’s proposed tariff and Excise Tax cuts would “reduce” VAT’s impact on prices and the Consumer Price Index, ensuring a “neutral” effect on some goods in industries such as construction,food and light goods.

‘This is actually looking pretty good,” he added, upon review of the revised duty/tax rates. “There’s a lot of stuff here that’s going to decrease in price.”