Chamber and Government to maintain high levels of dialogue
ZIZ News…Nov. 1, 2010 – Representatives of the Government of St. Kitts and Nevis and the St. Kitts-Nevis Chamber of Industry and Commerce on Saturday 30 October, 2010 concluded four days of negotiations in an effort 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 on Monday, 1 November, 2010.
According to a joint release from the Chamber of Industry and Commerce and the government of St. Kitts and Nevis, it was unanimously agreed by the parties 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 31 October, 2010.
It was generally 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% credit on goods in stock as at 31 October, 2010 for which consumption tax would have already been paid, given that VAT at 17% would otherwise likely be applied to the price of the said goods come 1 November, 2010. It was further agreed that merchants, distributors and/or wholesalers would not increase the prices of such goods by more than 8% of current prices until such stock is depleted. After the stocks are deleted the consumer would see variable adjustment in prices. 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.
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 lead by the Hon. Prime Minister supported by the Attorney General, Comptroller of Inland Revenue and VAT Team Leader while the Chamber was led by its President supported by representatives from the manufacturing and general trading sectors.