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Download VAT Implementation September 1,2012
Transcript
1 Format of Presentation VAT Rates; Requirements Under the Law; VAT Terms; Treatment of Certain Items; Operating in VAT Environment; Support for Business Sector; Transition Arrangements; Concessions -Imports and Exports 2 VAT Rates Standard rate 15% - applied on all goods and services, Reduced Rate applied to the Hotel Sector; Zero rated (0%) – the First Schedule of the Act refers. Include electricity, water and petrol; Exempt – basic goods and services (includes education services and supplies; medical services) 3 Requirements Under the Law Threshold for registration is $180,000 per annum; Certificate of Registration must be prominently displayed on business premises; Displayed prices must be VAT-inclusive; Monthly returns to be filed 21 calendar days following the month for which the tax is due. Tax due must accompany return; A system of invoicing is used to administer the tax, and so there are special requirements for record keeping.; 4 Requirements Under the Law Record Keeping – the Law mandates that the following records be maintained in English Language for six (6) years: (Sales and Purchases) - tax invoices, receipts, tax credit notes and tax debit notes; Customs documentation relating to imports and exports; Accounting records relating to taxable activities carried on in Saint Lucia; Other business records. Penalties are applicable for failing to maintain proper records. 5 Requirements Under the Law Only VAT Registered businesses can: Charge and collect VAT; Issue tax invoices to other registered taxpayers; Reclaim Input VAT; Be referred to as taxable persons (tax payers). 6 VAT Terms Supply: a supply could be of a good or service; Supplies of goods = sales, leases, licences, options etc for tangible property (including commercial real estate); Supplies of services = any supply that isn’t a supply of goods is a supply of services. Services industries (lawyers, accountants, plumbers). Supplies of rights, e.g. copyrights, telephone cards, pre-paid vouchers, restrictive covenants All supplies are either supplies of goods or supplies of services. 7 VAT Terms Exempt Supplies - No VAT is charged on supplies. Registered businesses cannot claim VAT paid on inputs. Zero Rated Supplies - No VAT is charged (i.e. 0 percent). Registered businesses can claim for VAT paid on inputs. Input VAT - The VAT registered businesses will pay on the value of imports; and the value of goods and services acquired from other registered businesses. Output VAT - The VAT a registered business will charge customers on goods and services supplied. Tax period – a calendar month 8 VAT Terms Taxable Activity Any activity carried out on a regular or continuous basis & involving the supply of taxable goods or services whether or not for profit, for consideration; Does not include: hobbies & private activities, employment, Government activities that don’t involve supplying goods or services to the public 9 Treatment of Certain Items Already existing stock: No credit for consumption tax already paid. Agreed will cause a price spike and will address this in Public Education; Entertainment-Expense incurred: Input Vat nonreclaimable; Capital Goods: taxable – input VAT reclaimable; Exempt where productive activity has not commenced; Commercial rent: taxable at 15%; Passenger Vehicles: no input tax deduction allowed for the purchase or importation unless the business is dealing in or hiring of vehicles and the vehicle was acquired for the purpose of such business 10 Treatment of Certain Items Contracts – where concluded before the commencement of the VAT Act and no provision is made for the tax, the supplier is to recover the tax due from recipient of any supplies made under the contract after the Act comes into operation. For contracts concluded after the commencement of the Act, the contract price is deemed to be VAT inclusive and the supplier must account for the tax. 11 Treatment of Certain Items Refunds A carry forward of excess tax credits for a 3 month period The application of credits to future payments The refund of any credits existing after 3 months The payment of interest if not refunded promptly To achieve this a portion of the VAT collected at Customs will be set aside in accordance with the Finance (Administration) Act, Cap 15.01 12 Operating in a VAT Environment During the course of a registered business’ operations it will pay VAT on its taxable inputs (local purchases and imports) and charge VAT on its taxable sales. The VAT payable to the IRD for the tax period is calculated as: Output VAT- Input VAT= Net tax remitted to IRD If the net tax is a refund the Bill provides for the carry forward of the refund for a period of three month during which it is treated as input tax deduction (available for setoff against output VAT Due) 13 Operating in a VAT Environment Payment: VAT is due and payable within 21 calendar days after the end of the tax period. Payment for VAT charged on imports due and payable at the time of Importation. Penalties and interest are applicable for failure to pay. VAT Returns: must be filed within 21 calendar days after the end of the tax period whether or not tax is payable for the period. Penalties are applicable for failure to file. The Bill provides for – Assessments; Objections and Appeals 14 Operating in a VAT Environment Forms: Application for Registration; Change of Registration Details Disclosure of Errors in VAT Return filed Application for De-registration; Monthly Remittance Forms; Notice of Claim for Refunds Objections VAT Return 15 Support for the Business Sector Sector Specific Engagements Initially to cover 10 (ten Sector) with 3-4 hour presentations; Some sectors and business groupings already identified and some dates already confirmed; Advisory and Registration Exercise To commence before Sept 1 and continue beyond; Intention to visit, register and advise every business even past September 1; The advisory entails one-one discussion with accounting personnel and business owners. 16 Support for the Business Sector Outline For the Presentations General VAT principles (pricing, operating in the VAT environment); Charging VAT (Taxable supplies; identifying time and place of supply; value of supply); Accounting for VAT 17 Support for the Business Sector Small Business Sector Support The Ministry of Commerce through SEDU will be providing support to small business training. The goal of the project is to prepare the Medium, Small and Micro Enterprise Sector to transition into the VAT era. The Package is made up of: Training on VAT and general business procedures; Regularizing business status (registration with IRD, NIS, Business Name); Software package; Training available free of charge for businesses registered by September 1, 2012. Training to commence in July 2012 . 18 Transitional Arrangements Transitional Provisions and Procedures Free storage at seaports for registered businesses only. Available from July 1 to September 30, 2012 Partial clearance allowed SLASPA support confirmed CED response confirmed 19 VAT & Customs How it works Transitional Provisions and Procedures Export of goods Effect of VAT on Concessions Preparedness of Customs & Excise Department 20 VAT & Customs How it works Replaces Consumption Tax and Environmental Protection Levy Payable on clearance for home consumption Payable on compounded value – last tax Preparedness of Customs & Excise Department 21 CED Transitional Policies Taxpayers will have the following options: Free storage at the seaports for a three month period July 1 – Sept 30, 2012 CED and SLASPA preparedness and partial clearance Conversion of existing storage facilities to bonded warehouses (this will be done on a case by case basis) CED role re application, approval, security and operation DCA and Fire Department role re approvals Agreed procedures manuals to be circulated 22 VAT & Exports Export are always zero rated Manufacturers Notification of intent to export Verification of goods Certificate of shipment Registered businesses To adopt similar procedures CED to oversee these activities Agreed procedures manual to be circulated 23 VAT & Concessions On Imports Fiscal Incentives - prior to commencement of activity Disaster threat or response (NEMO approval) Personal effects and returning nationals effects Unconditional gift to state or charity Diplomats, Charities, and International organisations On Domestic purchases Refund system is used 24 Customs Preparedness Logistics Staffing assignments Training of officers brokers, and shippers Publication of confirmed procedures Import transactions ASYCUDA World Tariff and other tables preparation Budget head activation Refund account Domestic transactions Consumption tax arrears management 25
