A Goods and Services Tax, otherwise known as VAT, will be implemented in Anguilla as from the middle of this year.
Accordingly, it forms part of the revenue measures in the Government’s 2019 Budget Address where it was mentioned by Chief Minister and Minister of Finance, Mr. Victor Banks on March 22.
In explaining the GST to The Anguillian newspaper, Permanent Secretary, Dr. Aidan Harrigan, said: “The first phase should come into operation on June 1 with the “Goods” component. It will reduce the Customs tariff rate. Right now, on average, the rate is 12 and a half percent. It hasn’t been decided yet, what it will be, but there will be an adjustment downwards. It means that in the short and medium term there will be a loss of revenue. What is being done is an adjustment to the Customs surcharge to recoup what was lost by reducing the Customs tariff rate. That is called an Interim Goods Tax.
“The other phases will subsequently come on stream. The first phase of the “Service” component is supposed to come on line in 2021. There will be a combination of the Service Tax, the Environmental Levy and the Communications Levy under the GST, plus inclusion of wholesale and retail establishments. The third phase is scheduled for sometime in 2023 when other services will come online. We have not decided on this as yet, but they will likely include restaurants, car rentals and so on.”
Dr. Harrigan continued: “A study will have to be done in terms of the services to decide what the rate will be in Anguilla, but in other OECS countries the rate is about 17 percent or thereabout. Not every business will be involved so there will be a threshold based on turnover – but that has not yet been decided. If the turnover of a business per year is below that threshold, it means that such a business will not be signed up to collect the tax.”
The Permanent Secretary explained that if, for example, a supermarket or other business place imported goods to sell, that business will be collecting the GST on behalf of the Government of Anguilla. It is therefore the consumer who will be paying the tax. “If you buy groceries for 100 dollars and the GST rate is 15 percent, for example, you will have to pay 115 dollars and the Government will get that 15 dollars,” he pointed out.
Asked how the tax would be collected and paid in by a business place, Dr. Harrigan stated: “It will be just like how the hotels, for example, collect the Accommodation Tax from tourists and remit it to the Government or the Inland Revenue Department on a monthly basis,” he explained. “Of course, they have to submit statements so that they can be audited or cross-checked.”
Asked, for an example, where the payment of the normal Customs Duties comes into play he said: “There will still be Customs Duties but at a lower rate. If a business person imports items for sale to the public, he or she will pay duty but there will be a mechanism in the tax for a credit or refund if that business generate products or services for sale. Certainly for those businesses, I think it should reduce the expense to provide goods & services.”
“Shouldn’t business then reduce the cost to customers?” Dr. Harrigan was asked.
“We would hope so,” he replied. “The idea is to try and help them to have a more cost-efficient basis in a more business friendly environment.”
Dr. Harrigan stated that there will be public consultations on the GST, and that there will be two consultants to provide advice. One will be a Customs Adviser, a former Comptroller of Customs in St. Vincentwho led the implementation of VAT there. The other will be from England, a Tax Adviser with Inland Revenue experience – and has implemented GST and VAT in various parts of the world.
