Business

Four govt agencies part of pilot VAT withholding scheme

The only entities currently engaged in the government’s value-added tax (VAT) withholding scheme are government agencies, Acting Comptroller of the Department of Inland Revenue (DIR) Shunda Strachan said yesterday, explaining that this scheme should assist in recouping some unrealized revenue.

Strachan, who made the comments while a guest on Morning Blend Business on Guardian Radio 96.9 FM, said those appointed government agencies that are part of the pilot VAT withholding scheme are the Ministry of Works, the Ministry of Education, the Ministry of Public Service and the Treasury Department.

She explained that those agencies of the government, when issued an invoice with VAT from a client, will withhold 40 percent of the VAT due to be paid to that client and remit that 40 percent directly to the government. That ministry’s client is then responsible to remit the remainder of the VAT to the government during their regular filing.

Strachan said this scheme will allow the government to capture VAT from companies who either do not pay, take long to pay, or are not VAT registrants, but should be.

“It’s a way for the government to get its VAT in a quicker time period,” said Strachan. “It’s a compliance tool that we’re going to be using.”

She added: “It will solve the problem that we’re not getting all the VAT and in some cases there are some vendors or suppliers that should be registered, but they’re not.

Strachan said in the case of companies who might send an invoice to one of the government agencies now involved in the withholding scheme, and that invoice should include VAT, the agency will assign the VAT and the company will have to explain to DIR why it did not charge VAT on the invoice.

She explained that in the case of a company that turns out to not be a VAT registrant, an explanation will need to be offered for their position.

“We’ll review what they have claimed and make a determination of whether or not they should be registered for VAT,” Strachan said.

While Strachan could not say off-hand how much in arrears the VAT scheme currently is, she said the problem of compliance is large enough that the DIR has employed the VAT withholding tool.

“It is a considerable amount that were seeing in terms our arrears and delinquent payments,” she said.

She said next year other trusted agencies will join the VAT withholding scheme.

“This is something that will go on. Next year we will appoint other agents… trusted businesses that have been very conscientious in how they file and pay their VAT,” she said.

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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