BASSETERRE, St. Kitts, CMC – An agreement has been reached between the Government of St. Kitts and Nevis and the St. Kitts-Nevis Chamber of Industry and Commerce to prevent as far as possible the likelihood of double taxation and an immediate inflationary effect in the Federation when Value Added Tax (VAT) becomes effective tomorrow.
After four days of negotiations it was unanimously agreed by the parties on Saturday that neither the public nor private sector wanted the inception of VAT to present any undue financial burden on consumers.
“As such, there was consensus on two essential points of concern, namely, the impact of VAT on (a) prices; and (b) inventory on hand for which consumption tax would have already been paid on or before October 31, 2010,” said the joint statement.
The Government and Chamber agreed that the ongoing Government Stimulus Programme will be expanded to incorporate the manufacturing sector.
“Consensus was also achieved regarding Government’s provision of an 8 per cent credit on goods in stock as at October 31, 2010 for which consumption tax would have already been paid, given that VAT at 17 per cent would otherwise likely be applied to the price of the said goods come November 1, 2010.
“It was further agreed that merchants, distributors and/or wholesalers would not increase the prices of such goods by more than 8 per cent of current prices until such stock is depleted. After the stocks are depleted the consumer would see variable adjustment in prices,” the statement said.
It was also understood that a number of administrative provisions would be put in place in order for the inventory credit to be effected, including but not limited to, enterprises applying for the inventory credit by 30 November, 2010 and presenting proper documentation of such stock actually being on hand as at 31 October, 2010.
“The inventory credit could then be used by businesses to cover taxes due to Government and also utility charges. However, the Comptroller of Inland Revenue reserves the right to deny or exclude any inventory or part thereof that cannot be reasonably verified,” the statement added,
Saturday’s private/public sector deliberations on VAT concluded with both Government and the Chamber agreeing to sustain consultation and collaboration in the interest of ensuring a smooth transition to the new tax regime.
Commitment was given on both sides to maintain high levels of dialogue on VAT, and also to conduct a VAT implementation assessment after three months in an effort to ascertain how well the new tax structure is operating in practice – with a view to making improvements where necessary.
The Government’s team was led by the Prime Minister and Minister of Finance Dr. Denzil L. Douglas, Attorney General and Minister of Justice and Legal Affairs, Patrice Nisbett; Comptroller of Inland Revenue, Mrs. Beverly Williams and VAT Team Leader, Mr. Edward Gift.
The Chamber was led by its President, Mr. Michael Morton, supported by representatives from the manufacturing and general trading sectors. (CMC)
