Even though T&T is going through its worst economic downturn in three decades, the Government always has to be careful about not being penny wise and pound foolish.
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New VAT regime now Feb 1
The Government has targetted February 1 as the new implementation date for the revised Value-Added Tax (VAT) regime, which involves the reduction in VAT from 15 to 12.5 per cent, and the broadening of the range of items that are subject to VAT, according to a statement on the Web site of the Ministry of Finance, which was released at the end of last year.
The Minister of Finance advised that the changes to the VAT regime, as well as the increase in the Personal Allowance for individual taxpayers, the increase in the Green Fund Levy and the Business Levy, and the implementation of the Property Tax, all require legislative amendments.
The statement said that it was the intention of the Government to introduce the Finance Bill 2016 in the House of Representatives on Friday to give effect to these legislative amendments and/or to utilise the mechanism of Ministerial Orders, which would be subject to negative resolution of Parliament.
According to the ministry, the list of items that will be subject to VAT at the new rate will be published on January 8, 2016, which would give VAT-registered companies three weeks to make the necessary adjustments to the cost of their goods and services and to adjust their billing and reporting cycles.
“In this regard, the reduction in the rate of VAT to 12.5 per cent and the changes to the range of items that will be subject to VAT are now scheduled to take place on February 1, 2016,” according to the statement. It said that he requisite amendments to the Property Tax Act will be made at a later date.
The other taxation measures, namely the increase in the Personal Allowance from $60,000 to $72,000, the increases in the Green Fund Levy and Business Levy and the implementation of the Property Tax will be made effective from the beginning of 2016.
It should be noted that although the Finance Bill and the amendments to the Property Tax Act will be introduced in Parliament in January 2016, these latter taxes and measures, ie the adjustments to the Personal Allowance, Green Fund, Business Levy and Property Tax will be made effective from the beginning of 2016 because they are due and payable, and/or effective, on a quarterly or annual basis, as opposed to VAT, which is due and payable on a bi-monthly basis.
In the 2016-budget speech, Finance Minister Colm Imbert promised that changes to the tax structure, including a decrease of 2.5 per cent, would have been implemented on January 1.
He said that he proposed to increase the rate of contribution to the Green Fund from 0.1 per cent per quarter to 0.3 per cent per quarter and that measure would increase revenue by $544.5 million. and will take effect on January 1, 2016.
Imbert also told Parliament during the budget presentation that in order to spread the burden of adjustment across the society, he proposed to increase the Business Levy from 0.2 per cent per quarter to 0.6 per cent per quarter. This measure will increase revenue by $327.5 million.
The increases to the Green Fund and the Business Levy were both due to take effect from January 1, 2016. In his address to the nation last week Tuesday, Prime Minister Keith Rowley said that all ministries, departments and state enterprises would be required to adjust their operational expenditure by 7 per cent.