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BASSETERRE, ST. KITTS, JULY 19TH 2010 (CUOPM) – The general public is reminded that the Value Added Tax (VAT) Bill, 2010, is still available for scrutiny.
The 150-page draft legislation was introduced and given a First Reading in the National Assembly earlier this month.
The VAT Bill makes provision for the imposition and collection of value added tax on the supply of goods and services in St. Kitts and Nevis and on the importation of goods and services into the twin-island Federation.
The Bill, which also provides for related or incidental matters, is primarily a result or product of the tax reform process initiated by the Government in order to reform the federation’s tax regime.
Part 1 of the proposed bill, provides for matters of a preliminary nature. Part 2, makes provision for administrative matters in that it makes the Comptroller of Inland Revenue to be responsible for the implementation of the provisions of the Act. It spells out in clause 7, the powers, duties or functions imposed on the Comptroller and gives the Comptroller power to delegate any of his powers, duties and functions subject to certain conditions.
The Bill seeks, through clause 8, to impose restrictions on the disclosure by taxation officer of matters coming to his or her knowledge or the giving of access to any person of records in his or her possession or custody, except in the exercise of the powers of the taxation officer or the performance in the course of exercise of his or her functions under the Bill or by court order.
An exception to the restriction on disclosure is provided for where the Comptroller discloses (a) to a person and the disclosure is necessary for the purposes of the Bill or another law in force in Saint Christopher and Nevis administered by the Comptroller or the Comptroller of Customs; (b) to a person who is authorised by any other law in force in Saint Christopher and Nevis to receive such information; or (c) the information for the purpose of double taxation agreements entered into with the other States (d) to a person in a revenue statistical department where the information does not identify a specific person.
A breach of clause 8 shall be a criminal offence triable summarily.
Clause 9 of the Bill seeks to make the Comptroller of Customs a person who shall, on behalf of the Comptroller of Inland Revenue, be responsible for the collection of value added tax on imported goods, and for the purposes of collecting and enforcing the payment of that tax the provisions of the Customs (Control and Management) shall be applied with such modifications as are necessary as if the collection and enforcement of the payment of the tax were a duty of customs.
Clause 10 of the Bill seeks to make provision for the procedure and method to be used by the Comptroller of customs in collecting and enforcing the payment of value added tax, while clause 11 seeks to make provision for the procedure and method of collecting and enforcing payment of the tax on imported services. In other words, those clauses spell out the administrative aspect of collection and enforcement of payment of the tax.
Part III of the Bill seeks to make provision for the registration of persons who make supplies of goods or services for consideration. The registered person shall be required to recover tax from the person supplied with goods or services. The process for registration including the submission of an application, the requirement for further information, the registration, the keeping and maintaining of a register, the display of a certificate of registration, change of information, and the cancellation of registration is provided for in clauses 12-24.
Part IV of the Bill makes provision for the imposition of value added tax, and the rate at which the tax is to be charged (Clause 26). Clause 27 makes provision for the calculation of tax on imported goods, while Clause 28 makes provision for the method of determining the value of imported goods and services for purposes of calculating the tax. This also makes provision as to who is a taxable person (Clause 25). The rate of tax, except in the case of a zero rated supply, may be amended by the Minister, by Order, which Order shall be subject to affirmative resolution of the National Assembly (Clause 26). Clauses 30, 31, and 32 make provision for exempt imported goods, exempt imported services, and zero rated supplies, respectively.
Part V of the Bill seeks to make provision for rules relating to supplies. In that connection, clauses 33 to 37 seek to make provision relating to zero rated supplies, exempt supplies, time of supply, place of supply, and value of supply, respectively.
What is important to note about these clauses is the following: the time of supply is described as the earliest date on which the goods are delivered to the recipient or made available or the performance of services is completed or any consideration for the supply is received by the supplier, etc; the place of supply of goods is described generally as the place where the goods are delivered or are made available to the recipient; a supply of services is deemed to take place generally at the place of business of the supplier from which the services are supplied; and the value of supply of goods and services is generally described as the amount of consideration for the supply.
Part VI of the Bill seeks to make provision for the calculation of tax payable on taxable supplies made by a taxable person. In that connection, Clause 38 provides that the tax payable by a taxable person for a tax period in respect of taxable supplies shall be the amount of the output tax payable by the person in respect of the taxable supplies made by the person during the tax period less the total input tax and deductions allowed for the tax period.
Clause 39 provides for the calculation of the input tax deduction that would be allowed for purposes of section 38. Clause 40 provides for input tax deduction allocation and disallowance rules. Clauses 41to 44 make provision for post sale adjustments and bad debts, interest on unpaid tax, tax invoices and sales receipts and tax credits and debit notes, respectively.
Part VII of the Bill seeks to provide for the tax period, returns and assessments applicable to a taxable person. In that connection Clause 45 provides that the tax period that will be applicable to a taxable person is the calendar month.
Clause 46 makes provision to the effect that every taxable person shall be required to file a taxable return with the Comptroller for each tax period, whether or not tax is payable in respect of that period.
Clause 47 makes provision for extension of time in which a taxpayer is required to file a tax return by the Comptroller, and this has to be done upon application by the taxpayer showing good cause why the time should be extended.
Clauses 48 and 49 seeks to empower the Comptroller to make assessments of the amount of tax payable by a person or the amount represented by the person as payable in respect of a supply in certain circumstances including where the person fails to file a return or where the Comptroller is not satisfied with a return or import declaration filed by taxpayer.
Part IX of the Bill makes provision for the payment and recovery of tax. In that connection Clause 50 makes provision for the due date for payment of tax. Then Clause 51 makes provision for the allocation of payment so that where interest is payable by a person any payment is applied first to the interest and then to the tax to the extent that the payment exceeds the interest.
Clause 52 seeks to provide that tax due and payable is a debt due to the Crown, and is payable to the Comptroller, and is recoverable in the manner provided for by the Income tax Act, unless it is collected by the Comptroller of Customs and recovered under the Customs (Control and Management) Act.
Clause 53 makes provision for the recovery of tax from a person leaving Saint Christopher and Nevis, and in that connection it seeks to empower the Comptroller to obtain a court order directing the Chief Immigration Officer to take all necessary steps to prevent the person from leaving Saint Christopher and Nevis until the person makes payment in full or makes satisfactory arrangements with the Comptroller for the payment of the tax.
Clause 54 seeks to empower the Comptroller to require a security for payment of tax, which security may be in such amount, such form, and be furnished within such period as the Comptroller may specify in the relevant notice.
Clause 55 makes provision whereby the Comptroller shall have preferential claim to the assets of a taxable person from the date on which tax becomes due and payable etc.
Clause 56 seeks to empower the Comptroller to seize assets of a taxable person where he or she has reasonable grounds to believe that tax has not or will not be paid. Further, Clause 57 seeks to empower the Comptroller to institute distress proceedings against personal property of a taxable person in order to recover unpaid tax, while Clause 58 seeks to empower the Comptroller to recover tax from recipients of supplies in cases of fraud or misrepresentation by recipients. Clause 59 seeks to empower the Comptroller to recover tax from third parties who owe or hold money for a person liable to tax, while Clause 60 seeks to spell out the duties of a receiver of assets of a taxable person, and to make the receiver personally liable for amounts required to be set aside for tax.
Part IX of the Bill (Clauses 61 – 63) provides for carrying forward of excess credits, refund of tax and payment of interest on overpayment. Further, Clause 63 makes provision that would enable the Minister to authorize the grant of refunds to diplomats, organisations or Governments, except citizens and permanent residents of Saint Christopher and Nevis.
Part X of the Bill (Clauses 64 – 68,) makes provision for objections to be made to the Comptroller by persons who are dissatisfied with any appealable decision. Provision is also made for appeals to be made to the Appeals Commission, the High Court and the Court of Appeal by person who are dissatisfied by any decision. For purposes of this Part, it is important to note that Clause 68 imposes the burden of proving that an assessment is excessive or that a decision of the Comptroller is wrong on the person who is objecting to the assessment or decision.
Part XI of the Bill makes provision for the tax liabilities of representatives and special cases of taxable persons including persons who are acting in a representative capacity, directors of corporate bodies, officers of incorporated bodies, including partnerships and branches.
Part XII of the Bill (Clauses 78 – 83), seeks to make provision for the keeping of proper records by taxable persons and to empower the Comptroller to have access to records, computers and goods of a taxable person. In that connection, Clause 79, seeks to impose an obligation on taxable persons and other persons who are liable to pay the tax to maintain records, including original tax invoices, tax credit notes, tax debit notes, customs documentation relating to imports or exports, and accounting records.
Part XIII of the Bill seeks to make provision for offences that may be committed under the Act and penalties attached to such offences. The offences are of two categories, namely, criminal offences and civil offences. Clauses 84 to 94 sets out the criminal offences and penalties attached to those offences. Clause 84 seeks to vest the power of instituting criminal offences under this Act in the Comptroller, subject to the powers of the Director of Public Prosecutors under the Constitution.
Clause 85 seeks to make provision for the time limit within which criminal proceedings committed under this Act may be commenced. A time limit of three years after the discovery of the act, or after the Comptroller becomes aware of a failure to do an act, or after the Comptroller has come with a correct liability to tax in cases of incorrect disclosure or non-disclosure of information relating to liability.
Offences under this Part include tax evasion, impeding of tax administration, collection of tax by a non-registered person, and giving false or misleading statements (Clauses 86-92). A general penalty clause is provided so that where no penalty is specified for an offence committed under the Act, a penalty not exceeding ten thousand dollars or imprisonment for a term not exceeding one year or both may be imposed (Clause 93).
This Part of the Bill also contains provisions for civil penalties (Clauses 95 to 105). Civil penalties are imposed in respect of failure to register or to display certificate, failure to notify the Comptroller as required by the Act, issuing a false or misleading tax invoice, failure to file returns, failure to comply with notice for recovery of tax, failure to keep records, failure to provide facilities, failure to comply with notice to give information, noncompliance with price quotation requirements, making false or misleading
Clause 106 seeks to empower the Comptroller to temporarily close business premises of persons who are convicted of more than one under certain sections, while Clause 107 states that the Comptroller may also publish the names of defaulters upon conviction for offences under the Act.
Part XIV of the Bill makes provision for matters of a miscellaneous nature. Such matters include issuance of a tax identification number by the Comptroller, validity of forms, notices, returns and documents authorized and published by the Comptroller, service of notices, tax inclusive pricing schemes for obtaining tax benefits, currency conversation, international agreements, supply by an auctioneer or agent, making of regulations by the Minister, and repeal of certain taxes and the remission of taxes (Clauses 108-124).
Part XV of the Bill seeks to make provision for matters of a transitional nature, and in that connection, Clause 125 contains the general transition provisions. Clause 126 sets out the transitional requirements for the registration of persons who were registered under the repealed tax Acts, while Clause 127 contains other transitional requirement for the registration of persons who were not registered under the repealed tax Acts.