A Committee was constituted to analyze the VAT bill. This Select Committee was Chaired by, the Prime Minister – Dr, the Hon Ralph E.Gonsalves, with other members being:

• The Hon. Attorney General
• Minister of Foreign Affairs
• Minister of Urban Development and Culture
• Minister of State in the Prime Minister’s office
• Minister of Tourism, Youth and Sports
• Minister of Housing
• Hon. Richard Williams
• The Leader of the Opposition Hon. Arhnim Eustace and
• Hon. St. Clair Leacock.

Also attending Select Committee meetings were Dr. Linton Lewis, representatives from the Tourism Sector, Chamber of Industry, and Finance Officials.

The Select Committee met every Friday and examined the VAT Bill in its entirety. Recommendations and feedback made by stakeholders were taken into account, and the following changes were made:

• Time to claim refunds changed from six months to three months.

Taxpayers had indicated that the six months proposed to carry forward credit was too long as it would create some cash flow problems. These concerns were taken into consideration and the period was adjusted to three months.

As a result of this change taxpayers will now be able to file a refund claim after three months of carrying forward a credit.

The refund due should be paid within three months after the application.

If the department fails to pay the refund, then interest will be due on the amount at the current market rate.

However, if you are an exporter with export sales of over 50% of your total sales you can apply for your refund when you file your return.

Threshold:-

The threshold was changed from $60,000 to $120,000.

A threshold of $60, 000, would have increased compliance cost to small businesses and also place a burden on the tax administration. Persons on the other hand with gross sales of $120, 000 would be capable of facilitating the VAT by acting as agents for the government to charge and collect VAT. The threshold is not only for annual sales placed on goods but also refers to the supply of service by service providers that are not exempted. For example, Lawyers, Contractors, Hair dressers and Accountants to name a few, must register for VAT if the annual supply of the service provided exceeds $120,000. Service providers are invited to contact the VAT unit for information that would assist them to be VAT ready. You need to contact the VAT unit to get a proper or better understanding of the VAT system.

• Another change made was that of the VAT implementation date.

The Implementation date was changed from 1st January – 1st May, 2007 in order to grant the business sector some more time to be prepared as they should be for VAT. This was done because of the concerns of the business community and the Tourism sector.

Businesses are therefore encouraged to use this time wisely. All businesses and service providers in St. Vincent and the Grenadines need to intensify their preparation plans now for VAT, before May 1st 2007.

And remember, it’s never too early to be VAT ready.