The Tribune

The Government has approved “several hundred thousand dollars” of Value-Added Tax (VAT) credit refunds, a top official yesterday promising that businesses would not endure “a protracted wait” to receive them.

John Rolle, the acting VAT Comptroller, told Tribune Business that registrants who had still to receive due credits would see them “flowing back” before end-May.

With three months of VAT returns now in, Mr Rolle said the Government’s revenue targets - $150 million for the 2014-2015 half-year, and $300 million for a full Budget period - remained “within reach”.

He added that VAT revenues to-date were “still meeting or exceeding expectations” due to high compliance rates among its roughly 6,000 registrants.

Mr Rolle told Tribune Business that the results so far were evidence that a “compliance culture has kicked in” among tax-paying businesses, although he conceded that voluntary registrants required “a little more coaxing” to meet deadlines during the tax’s early stages.

Confirming that the Ministry of Finance, and its VAT Department, had begun the process of refunding VAT credits to businesses, Mr Rolle said: “Businesses that have not received credits yet, they should expect to see credits flowing back to them this month.

“We do have a few hundred thousand dollars in refunds that have cleared our inspection, and should be going out soon - definitely this month.

“It isn’t going to be a protracted wait beyond this point.”

The timely receipt of VAT credits was a major private sector concern prior to the new 7.5 per cent tax’s implementation, due to the implications delay or non-receipt would have for their cash flow and financials.

However, Mr Rolle said that large, monthly filers, should ultimately receive any due refund credits in less than 90 days “once they’ve settled into operations mode”.

With the first returns from quarterly filers now largely submitted, the acting VAT comptroller, who is also the Ministry of Finance’s financial secretary, said the revenue generated continued to meet the Government’s targets.

“I would say that it’s still meeting or exceeding our expectations, largely because of the strong compliance rate,” he said. “We’re satisfied with the turnout in terms of the collections. It’s a very good impulse.

“I think the [full year] revenue targets are within reach. This type of reform is the result you get when the compliance culture kicks in. This type of tax encourages more self-compliance, and there is greater compliance than you normally expect with this sort of reform.

“The reform is designed to make the process more convenient. The taxpayer does not have to stand in line at a government counter to pay. That type of convenience helps in terms of how quickly the taxpayer fulfills their obligations.”

Mr Rolle said the initial 80 per cent compliance rate among quarterly VAT filers was continuing to increase, with the VAT Department contacting all those that still had to submit returns/payments.

“For the most part, people are rather taken aback; not in a negative way, but at least in the sense that someone is following up and making contact,” he explained.

“It’s reassuring those businesses and finding out from them what the reason is for the delay.”

Mr Rolle said the VAT Department’s follow-up efforts were also concentrating on voluntary registrants - businesses with an annual turnover of less than $100,000, who do not need to register or charge VAT, but have opted to do so to ensure they can offset their ‘input’ taxes.

“There is a little bit of a lag with the voluntary registrants, so that is where the effort is greater to encourage them to come in,” Mr Rolle told Tribune Business.

“There is follow-up with this category of businesses to get them to file. That group has a larger percentage of registrants who are yet to file.

“For the voluntary ones, the compliance rates will be strong overall, but a little more coaxing needs to be done initially.”

The acting VAT comptroller said many businesses had realised that using the ‘Flat Rate’ scheme to calculate their tax liabilities simplified the process, and the Government was set to direct more registrants - especially the voluntary ones - to use it.

The scheme allows companies to calculate their VAT liabilities as 4.5 per cent of gross sales, a rate that reflects “a national average where businesses settle once you take all their credits out of the equation”.

Mr Rolle also urged the private sector to “follow through and make the [VAT] payment right away” once their returns are submitted, noting that several had exposed themselves to sanctions by delaying the monetary hand over and then missing the deadline.