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PORT OF SPAIN – The Trinidad and Tobago government says the main private sector organisation may have misinterpreted a statement by the International Monetary Fund (IMF) when it described as “wholly unsatisfactory” the TT$5.5 billion value added tax (VAT) refund arrears owed to the private sector by the government.
Earlier this week, the Trinidad and Tobago Chamber of Industry and Commerce (TTCIC) said that the matter remains of critical concern to the business community, given its negative impact on the ease of doing business.
It quoted a recent International Monetary Fund (IMF) Country Report that states that at the end of March 2017, tax arrears stood at 11 per cent of gross domestic product (GDP) and that Trinidad and Tobago had been ranked at 145th in the Doing Business survey’s “paying taxes” index.
“At this juncture, the T&T Chamber is concerned about both the impact on cash flow of VAT-registered businesses, and about the prospect of non-compliance.”
But in a statement, the Ministry of Finance said it wanted “to set the record straight” regarding the TTCIC statements noting that in referencing page 12 of the IMF Country Report, “the Chamber accused the government of having outstanding VAT arrears owed to businesses and individuals in the sum of TT$5.5 billion”.
The Ministry of Finance said that the “Chamber also accused the government of penalising businessmen and misrepresenting expenditure for the fiscal year ending in September 2017.
“The Ministry wishes to point out that the diagrams on page 12 of the most recent IMF Country Report indicate tax arrears owed by businesses to the State and not vice versa, which it has estimated at 11 per cent of GDP (gross domestic product) or approximately TT$16 billion.”
The government said that “what the IMF was saying is that tax avoidance, tax evasion and tax leakage in Trinidad, which it has described as “tax arrears” amounts by its estimation to 11 per cent of GDP, or $16 billion, which is the annual tax revenue being lost by Government.
“Therefore, the IMF did not at any time confirm that the government owes businesses tax arrears of 11 per cent of GDP. In fact, it confirmed the reverse.
“The Chamber has thus completely misunderstood the information in the IMF Report. It stands to reason that the government is not being punitive to businesses nor has it misrepresented expenditure in its most recent budget statement.”
In its statement earlier this week, the private sector group noted that while lengthy waiting periods were not uncommon, “the situation has now worsened with business people experiencing refund delays exceeding 24 months.
“In an already cash-strapped economy, added constraints from late or non-receipt of refunds impose yet another difficult burden upon the business community. It appears that those who are already tax compliant are being penalised nonetheless.”
The chamber said that it believes that a simple, short-term measure which could be taken by the government, is to allow companies to offset their refunds with payments due. (CMC)