VAT a step closer for people of TCI

| 05/07/2012

images_34.jpg(CNS): Despite growing opposition across the territory people in the Turks and Caicos Islands are more than likely going to paying VAT in the very near future. The new VAT Bill passed its reading with the TCI Advisory Council on Wednesday paving the way for the bill to the Consultative Forum for debate next week. Acting Governor Patrick Boyle who headed the session said the introduction of VAT was “hugely important for the future development’ of the UK’s overseas territory where direct rule was imposed in 2009 following a corruption scandal and massive mismanagement of public money.  “VAT will help ensure that public services receive a steady and predictable income,” he added.

“Public finances have fluctuated wildly in recent times. Under the present system if the money dries up what do we do – stop providing essential services?,” the acting governor asked rhetorically in the wake of the council’s approval but in the face of mounting local opposition.

“I am certain that the incoming Government in November will be grateful to benefit from such an improved future cash flow. The introduction of VAT will help put this country on a stronger footing for the future by spreading the same tax take over a broader more stable range of sources,” Boyle said. “The introduction of VAT is not about taking more tax, it is about creating more stable public finances.

He said the interim government had listened to concerns about cost increases and making a large number of things zero rated. 

“We have ensured that the consumer will not pay VAT on their electricity and water supplies, nor will they pay more for their VAT exempt essential items – rice, flour, fresh meat, fruit and vegetables – and a host of other everyday items too. We also made sure that VAT was not applied to resort Strata fees, which was a key piece of feedback from the Consultation period,” the acting governor added.

VAT will be applied however to legal, accounting, architectural or air-conditioning services which have not previously included tax in their sales price. This means the cost of doing business will increase by 11% though the Boyle stated that registered firms will have the benefit of being able to offset the VAT that they pay out to their suppliers against the VAT that they bring in from their clients.

“We also believe that it is fairer to have all significant businesses here in the Turks and Caicos Islands paying their share of the tax burden,” he said. “The proposed rate of VAT of 11% is deliberately set no higher than Accommodation Tax. Indeed, VAT will replace this and a number of other taxes will actually make administration easier for both Government and business.”

Boyle claimed that government had listened and was trying to do what is right for the future of the Turks and Caicos Islands. “I shall work with the Chief Financial Officer to ensure that in addition to the planned development programme with businesses, that we also reconsider how we might better communicate the undoubted benefits of VAT to the TCI with the consumer too.”

However, Turks and Caicos Independent Business Council opposing the new tax has claimed that there has not been any real consultation over what it sees as an inappropriate tax for the islands. Echoing the new business action group’s sentiments the local architectural profession has also raised its objections and concerns this week. Members of the profession say their industry is already hard hit by the numerous challenges in the local economy and that  VAT  is  fundamentally flawed  and  not  conducive  to  economic  sustainability  in  TCI. 

The profession presented government with a position paper setting out alternative proposals but according to a letter sent to the TCI government’s chief financial officer on 3 July by the local architects no feedback was received.

VAT White Paper

Category: World News

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  1. Anonymous says:

    Is it just me or could you replace TCI in this article with Cayman Islands and it would read perfectly the same.  Hmmm….