The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Tax Coalition co-chair yesterday warned that the number of VAT registrants could “explode” beyond the Government’s projected 4,000, with many companies voluntarily doing so to claim input credits.

Gowon Bowe, who is also a PricewaterhouseCoopers (PwC) accountant and partner, suggested that the Government could be “surprised” by the number of registrants whose annual turnover falls below the mandatory $100,000 threshold.

He said the Ministry of Finance should ensure that it has the necessary resources to handle the maximum number of registrants possible, as otherwise it may be “overwhelmed” and “surprised”.

“They know that there are somewhere between 15,000-18,000 businesses, let’s say 15,000 on the low end. They are looking at those that are now filing their Business Licenses in excess of $100,000 and coming up with the number 4,000,” Mr Bowe said.

“In reality those business that want to be able to claim their credits are going to have to register. The mandatory registration is for those above the $100,000. Those persons running successful businesses, even if it is less than $100,000, who would want to ensure they can claim their VAT credits, will actually voluntarily register.”

The Ministry of Finance is expecting “at least” 4,000 businesses to become VAT registrants, a senior official last week expressing confidence it had the necessary capacity to handle these numbers.

Financial Secretary John Rolle, during a Ministry of Finance’ VAT/Tariff working session last Friday, said the majority of the 4,000 registrants are expected to be small and medium-sized businesses.

“We expect that there will be at least 4,000 business es that register. The majority of the VAT registrants will be smaller sized business, which means that they will be filing their returns quarterly and, in some instances, semi-annually,” said Mr Rolle, adding: “We are comfortable that we will have the capacity to deal with the numbers.”

Mr Bowe said many businesses would likely also be attracted to the more simplified VAT filing requirements.

“In particular, they have now simplified where the businesses under $400,000 per annum can file twice a year. You’re going to have a lot more of the smaller businesses, who may have been concerned about the administrative burden of having to do so monthly, probably revisit their initial consideration about whether or not to register. In my mind I think as the system takes hold and persons become comfortable, you’re going to find the numbers explode, although you may not see 15,000,” said Mr Bowe.

The Tax Coalition’s co-chair added: “The capacity of theGovernment should not be banking on 4,000; it should be looking at what’s the maximum number of businesses that could register and make sure that the system can handle the majority of that, because they may get overwhelmed and surprised by the number of people who are below the $100,000 mark.”