The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government will likely miss its November 30 target for registering all mandatory Value-Added Tax (VAT) paying businesses, a Task Force co-chair yesterday saying the process would not be completed until after the tax’s January 1 implementation.

Edison Sumner, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, said the number of mandatory VAT registrants was likely to be inflated by companies/businesses not currently on the Companies Registry.

He explained that this stemmed from the fact that services professionals, such as attorneys and doctors, who will now be required to levy 7.5 per cent VAT on client bills, had previously operated under the licences required for their respective professions - and not registering on the Companies/Business Registry.

Mr Sumner told Tribune Business that, as a result, the number of Bahamian businesses seeking to register to pay VAT would likely “double” beyond the Government’s initial 4,000-4,500 estimate to 8,000 or more.

Asked by this newspaper whether the Government would meet its November 30 target for registering all mandatory taxpaying businesses, Mr Sumner responded candidly: “No. I think we’re going to have challenges with that.

“We certainly don’t expect everyone to be registered in time for the initial deadline set by the Government. I don’t think we’re going to get all of them registered by November 30, although we’re going to aggressively pursue that deadline.”

And he further revealed: “It will take us beyond January to get everyone registered.”

That means some businesses, including those with annual turnovers exceeding $100,000, and who are mandated by law to register to collect/remit VAT on the Government’s behalf, may not be ready and registered until after the new tax is implemented.

This is again likely to raise concerns that VAT implementation is being rushed to meet a tight deadline, and will be far from smooth come January 1, 2015 - with all the administrative confusion that is likely to bring.

Mr Sumner, meanwhile, said the fact many potential mandatory registrants were not on the Companies Registry - but licensed by their professional bodies - was likely top dramatically increase the number of firms signing up for VAT.

“The 4,000-4,500 businesses that were targeted initially, that number is likely to increase quite substantially,. maybe double,” Mr Sumner told Tribune Business.

“I think over 8,000 companies, at the end of the day, will be registered for VAT. I think that the number they’re [the Government] looking at is likely to double to perhaps..... My opinion is I think we’re going to look at as many as 8,000 who are going to be likely registrants.”

Many Bahamian businesses with annual turnovers less than $100,000 are also likely to choose to be voluntary VAT registrants.

Some will be forced to do this because larger, VAT registrant companies will only do business with other registrants due to the need to maintain a full audit and paper trail.

Other businesses will register voluntarily for administrative purposes, or to ensure they can reclaim or ‘net off’ the VAT paid on their inputs.

Mr Sumner’s comments thus align with those of his newly-appointed BCCEC chairman, Gowon Bowe, who previously told Tribune Business the Government was taking “a significant risk” if it believed just 4,000 businesses will register for VAT.

He, too, predicted that the total number of registrants might double to around 8,000.

Just 29 applications, from 20 businesses, were received during the first two days of online registration for VAT, but John Rolle, the Ministry of Finance’s financial secretary, previously said he was “optimistic” that both the November 30 target would be hit and implementation would not be “tumultuous”.

Mr Sumner said yesterday that the VAT Education Task Force’s “prime drive” - and that of the Ministry of Finance and its VAT Unit - was to get the largest businesses, who will collect the majority of the new tax, registered as rapidly as possible.

He added that the Government and Task Force, together with the Chamber and organisations like the Bahamas Institute of Chartered Accountants (BICA), would have to work hard with small and medium-sized enterprises (SMEs) and “hold their hands through the process”.

Mr Sumner said the Task Force was “pretty mobilised” and starting “to do the necessary outreach” to the business community and consumers.

He added that his co-chair, ex-BICA president Jasmine Davis, had attended the Exuma Business Outlook to help get the message out, and the Task Force was also set to hit Long Island next week.

The Task Force is also working with the Chamber’s registration drive, and will be using public service announcements, media appearances and newspaper supplements to further educate the private sector.

Meetings are also being held with the directors of large registrants, and Mr Sumner added: “Hopefully, by the end of November, we will have seen a good spike in the number of registrants as a result of the Task Force working with the VAT Unit and getting an increase in the number of registering companies.”

Acknowledging that “there is a challenge” for the Task Force to face, Mr Sumner said the issue was now to ready the Bahamas for VAT, and the speed with which this could be accomplished.