By Abisola Abiola

The Nevis division of the St. Kitts and Nevis Chamber of Industry and Commerce during its Value Added Tax (VAT) consultation sought to address some of the private sector’s concerns related to the tax.

The consultation which was held at the Red Cross Conference Room afforded scores of business owners across the island the opportunity to listen to the Antiguan experience of the VAT implementation.

Some of the concerns raised during the session were the impact it would have on the overall cost of living? The impact it would have on consumers? And whether there could be natural increases in the prices of goods associated with the implementation?

Ms. Petra Williams, Business Consultant from Antigua, during her presentation on the Antiguan experience from the introduction of VAT which is called the Antigua Barbuda Sales Tax (ABST) and implemented in February of 2007 said her main objectives in Nevis was to raise awareness among the business communities as to the issues they need to take on board and what they need to do to get prepared for the implementation process.

“One of the critical things that I did mention was the importance of the timing of the implementation, in terms of the level of stocks in the establishments. Of course with the implementation of the ABST, all year stocks that are already in your establishment will be subjected to ABST in addition to taxes that were paid.

“However the person from the Nevis Tax unit noted that that is being taken into account. I also mentioned the importance of record keeping.” As it relates to the price structure, she suggested that because there could be some areas that would not be able to recoup the VAT, there would be some natural price increases that would accompany the implementation of VAT. “But by and large because of how it is structured they should be able to reclaim most of their expenses, for those businesses that would be registered,” she said. The positive thing she noted from the St. Kitts and Nevis (SKN) white paper is where companies are allowed upfront to claim back or to not pay on the inputs coming from export. “I thought that was very useful upfront implement system and also the system that was being put into place for the reclaiming of credits from the government.”

Another positive thing she noted from the white paper which was not applicable to Antigua is the legislation that makes it clear that your credit can be applied to other taxes in the system. The threshold for Antigua is EC$25,000 per month, “once you are having sales of more than EC$25,000 a month you are liable to charge and collect the ABST”. In SKN there are specific recommendations which are yet to be settled. She disclosed that the ABST has impacted the cost of living in Antigua, some goods she noted did go down and there were also increases in prices of some goods. “Overall it has more or less stabilized in Antigua there are still some concerns that needs to be sorted. More or less it’s been very alright.”

Chairman St. Kitts and Nevis Chamber of Industry and Commerce, Nevis Division, Mark Toron, noted that one of the concerns he had is the possible increase in the cost of living. “We don’t know what percentage VAT is going to be applied at, one of the major areas I found interesting is zero rated goods, there are still costs incurred because of the VAT, that’s one of the things companies would have to take into consideration,” he said.

Manager and Director TDC Ltd Nevis, Mr. Ernie France was of the view that with more of these consultation persons will be more sensitised. “Our concern was always the time frame for the implementation; we think that there is not enough time because this is going to impact businesses in a big way. The time of year was also a concern for us, its in November just before Christmas, for TDC for example, it is the time of the year that we would have placed orders and are trying to get our inventories in and from the presentation you would recognise that the inventory before and after the implementation of VAT is going to be a major issue,” he said.

The new tax, as announced by Prime Minister and Minister of Finance, Dr. Denzil Douglas, will replace 12 existing taxes, including Consumption Tax, Hotel and Restaurant Tax, Cable TV Tax and Traders Tax among others. However, the implementation of a VAT in the Federation has caused many to wonder if they will be able to afford basic necessities.