ON GOING EDUCATION TO SUPPORT VAT COMPLIANCE
|Authored by:||Ministry of Finance|
|Source:||Ministry of Finance|
|Date:||January 2, 2015|
MINISTRY OF FINANCE
ON GOING EDUCATION TO SUPPORT VAT COMPLIANCE PUSH AS REGISTRATION CONTINUES; PRICE CONTROL CHANGES WILL ACCOMMODATE THE REFORM
With the January 1 introduction of the VAT, the Ministry of Finance stresses that sustained education of businesses and consumers will support the enforcement and compliance efforts. As to price controls, the Ministry announces that there has been extensive collaboration with the consumer protection division of the Ministry of Labour and National Insurance to allow adjustments to take effect on regulated margins. In the meantime, the number of VAT registrants is approaching 5,000, amid continued calls for those not yet presented in the mandatory category to come forward.
Businesses and consumers are encouraged to be vigilant: double check receipts and invoices
The Ministry encourages businesses and consumers to be vigilant against being charged VAT by illegitimate operations. That said, anyone caught issuing invoices and receipts which show VAT charges, without being duly registered could face severe fines and criminal prosecution. Firms that will be claiming credits should particularly be on alert for illegal practices as credits can only be claimed against invoices issued by valid VAT registrants. These valid receipts and invoices must show the amount of VAT being charged and the TIN of seller.
Most VAT registrants have until February 28, 2015 to complete changes to their accounting systems to issue fully compliant receipt and invoices.
There is no grace period for disclosing the amount of VAT that is charged or the TIN, as such must already be the case.
The public should be advised that prices will change even for business that are not VAT registrants, because these firms are now facing VAT related increases in operating expenses. These firms will treat the VAT as direct cost. Although the law prohibits them from issuing VAT receipts and invoices, it does not prohibit them from changing prices.
Price control regulations being adjusted; some reductions forthcoming
The public is also informed that amended price control regulations are being issued, to take effect from January 1, to allow businesses to have dual displays while they transition to VAT inclusive prices. This coincides with the VAT Regulations that give retail firms two months to change price labels to include VAT amounts. In the interim, registrants must display posters or other signage to indicate the inclusive prices. Consumers must pay the higher tax inclusive amounts, provided that the VAT is the only reason for increases.
The amended price regulations will also allow the tax to be accommodated in augmented price margins for breadbasket items and other price regulated items.
While emphasizing the importance of the Government’s social assistance program for families in need of any extra financial support, a spokesperson for the Ministry of Finance pointed to important cost savings that would be forthcoming on some goods. The published schedule of customs duty reductions which took effect today has substantial decreases for some household appliances (stoves, refrigerators, dishwashers and laundry machines) and for building materials. In other cases (such as clothing) the duty reduction should cap VAT related rises well below 7.5%.
Beneficial international influences are also at work for consumers. For motorists, predominantly lower import prices will take immediate effect in reduced regulated VAT inclusive cost of gasoline. Households should also expect important savings on the regulated cost of cooking gas (LPG).
Process of VAT registration continues
The Ministry of Finance is encouraged by businesses that continue to present themselves to the VAT Department for registration. As of January 1, approximately 4,930 business have completed the registration process and have been issued certificates. Once new applications received in last four days are processed, this count will surpass 5,000. Most applications in recent weeks have come from voluntary submissions by businesses claiming to have less than $100,000 in annual sales.
The published list of VAT registrants is being updated regularly on the Government’s website: www.bahamas.gov.bs/VAT.
“Still, more than 400 other applications are unprocessed despite follow up from the VAT Department with all of them by telephone and email,” says a Ministry spokesperson. “It is mainly because these applicants have neither produced business license documentation nor availed themselves of the fast-track procedures that have been offered.” These are businesses that would have submitted applications for some time now. They are urged to swiftly conclude their registration to minimize the penalties that will apply for mandatory registrants.
JANUARY 1 2015