Not all of the value-added tax (VAT) collected by taxpayers has been reported and remitted to the government, according to Auditor General Terrence Bastian. He said between the fiscal periods of 2015 and 2018, there was $41 million in outstanding VAT.
“Some taxpayers are withholding the revenue and their tax liability is increasing, coupled with the interest and penalties. Withholding VAT results in revenue leakage,” he said in the recently released Report of the Auditor General for the 2017/2018 fiscal year.
“We recommended that compliance and enforcement be bolstered to collect the VAT revenue. In addition, we recommend innovative tools be pursued to strengthen the VAT rate structure; while maintaining equity and equality for tax efficiency across the economy.”
More than $19 billion worth of goods and services were funneled through the domestic economy in 2018, however, just about half of that amount was taxable, according to the auditor general’s report.
Taxable supplies during the 2017/2018 fiscal period were valued at $9.85 billion and attracted 7.5 percent VAT.
This resulted in $680.58 million in actual tax revenue and $58.61 million in deferred VAT, for a grand total of $739.19 VAT collected.
“The transactions accounted for 52 percent of the overall consumption. Significantly, the $680.58 million actual VAT revenue accounted for 39 percent of the $1.73 billion tax recurrent revenue,” the auditor general noted in the report.
“The zero rate supplies activity pumped $7.87 billion in the market and accounted for 41 percent of the $19.01 billion, but attracted zero percent. These VAT registrants are normally in a VAT credit position and request a refund for the same. The VAT refund disbursements for the 2017/2018 fiscal year totaled $19.35 million.
“The exempt supplies activity injected $1.28 billion in the economy and accounted for seven percent of the $19.01 billion, but the transactions did not attract VAT. The zero-rated and exempt supplies, when combined, accounted for $9.15 billion or 48 percent of the overall $19.01 billion consumption of goods and services.”
VAT receipts since then have been on a downward spiral as the economy suffered the impact of Hurricane Dorian in 2019 and the COVID-19 pandemic in 2020.
In the 2019/2020 fiscal year the government collected $515.3 million in VAT.
For the first half of this 2020/2021 fiscal year, VAT receipts declined by 44.4 percent to $286.3 million, according to the recently released Combined Six Months Fiscal Snapshot and Budget Performance report, which was released on Sunday.