The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday described as “behind the ‘8’ ball” on preparing the private sector for its first Value-Added Tax (VAT) returns, which have to be filed and paid over to government in six weeks’ time.

Gowon Bowe, the Coalition for Responsible Taxation’s chairman, conceded to Tribune Business there was “not a lot of time left” to train the larger businesses that will have to file their monthly returns for January by February’s end.

And, while the Ministry of Finance will be heavily involved in a Bahamas Institute of Chartered Accountants (BICA) seminar on VAT returns, scheduled for February 12, Mr Bowe said training efforts were “very late” if this is the main effort.

“There hasn’t been a lot spoken about the filing, the paying and the training,” Mr Bowe told this newspaper. “We’re a little behind the ‘8’ ball.”

VAT-related training during late 2014 largely focused on ensuring mandatory registrants, meaning those businesses with an annual turnover greater than $100,000, completed the registration process by the Government-imposed November 30 deadline.

It also concentrated on business readiness for VAT’s January 1 implementation, particularly whether computer and IT systems would be prepared to calculate and levy the new 7.5 per cent tax.

With VAT now almost three weeks old, both the Government and private sector now have to turn their attention to the processes needed to complete a ‘full tax cycle’ - the filing and payment of accurate returns - so the Treasury gets the correct sums due to it.

“Businesses are now focusing their attention on proper recordkeeping, what is required of them in filing and preparing, and how to pay,” Mr Bowe said yesterday.

“There’s going to be a need for clear training on that. There’s not a lot of time for those businesses that have to file monthly by the end of February.”

Monthly filers are those companies with annual turnovers that exceed $5 million, and their sheer size and IT systems should enable them to cope better than most with the frequency of tax payments they have to make.

However, Mr Bowe told Tribune Business that payment methods for remitting due VAT taxes to the Government were still being determined.

“There’s a lot to how we pay that needs to be resolved,” he added. The Coalition chief said the Government was working with the commercial banks to facilitate electronic VAT payments, but the private sector also needed confirmation that the likes of certified cheques and credit cards would also be acceptable.

And, while the BICA seminar was scheduled for mid-February, Mr Bowe added: “Hopefully, a lot more will be done before that. Certainly, that is very late if that is the principal roll-out for those types of business.”

The VAT Education Task Force, the body appointed to act as the liaison between the Government and private sector over the tax, has indicated its focus will now be more on consumer education, although filing preparation will be part of its remit.

The Government, too, is well aware of the need for its VAT registrants to have a smooth initial encounter with the filing and payment system.

John Rolle, the VAT Comptroller and Ministry of Finance’s financial secretary, confirmed to this newspaper last week that this was vital to foster private sector confidence in the new tax regime’s efficiency.

And, from the Government’s perspective, a ‘smooth process’ is just as vital to its cash flows and revenue projections. Its perilous fiscal position mandates that it must collect every revenue cent due to it.

Mr Bowe, meanwhile, told Tribune Business that VAT’s implementation had so far involved “some bumps and bruises, but no major casualties”.

He added that apart from the inclusive versus exclusive VAT pricing argument, few systemic issues had reared their head.

While industry-specific issues were “cropping up here and there”, and businesses were still measuring their systems against the VAT Act and regulations, Mr Bowe said these had not crippled the private sector.

“We’re not without faults and challenges, but we still appear to be moving forward,” he added. “It’s not stopped commerce and activity.”

However, Mr Bowe said the VAT ‘conversation’ continued to come “full circle” to the twin topics of complete fiscal reform and checks on uncontrolled government spending. This, in turn, requires the two reforms that have been a hallmark of the Coalition’s campaign - a Fiscal Responsibility Act and Freedom of Information Act.

After timely collaboration with the Government whenever VAT-related problems occur, Mr Bowe reiterated that “the second biggest thing is how the monies are spent”.

As pointed out several weeks ago by Tribune Business, Prime Minister Perry Christie’s New Year’s address implied that VAT revenues would be used to finance the Bahamas’ infrastructure needs and spending programmes.

This was a marked departure from the Government’s initially-stated objectives, and has created uncertainty over whether the $400 million gross annual take that VAT is forecast to deliver will be used for national debt and deficit reduction.

“That’s the next big thing,” Mr Bowe told Tribune Business. “Consumers and businesses will not accept the use of funds in a manner alternate to them.”