In expressing this confidence, Ibrahim hoped that the core basic products which affect everyone are not adversely affected by these changes, “for the purpose of the consumer.” He identified flour and sugar as examples of some of these products.
However he said the Association does not determine which item is subject to the full VAT and which is not. Reiterating that the Association’s role is to obey the law and implement the necessary changes, Ibrahim said this exercise needs to be looked at in the context of raising the revenue which the country needs in light of the economic challenges that it is facing.
In an address to the nation on December 29, Prime Minister Dr Keith Rowley gave the assurance that, “the rationalisation of the VAT regime will take particular note of those items which may be included in the basic list or must be retained in the list in light of these measures.” The Prime Minister explained, “This will cushion the effects of any increases in prices of basic food items.” However Rowley pointed out, “Imported salt and fat dietary items, their local counterparts and luxuries will all be subjected to the full tax regime.” He said while there may be some challenges with respect to tagging and labelling of goods in keeping with the VAT changes, he did not foresee any hiccups as far as meeting the February 1 deadline was concerned.
Ibrahim welcomed the Government’s decision to give VAT registered companies sufficient time to make the changes that they had to do. In a statement last Friday, the Finance Ministry indicated that the VAT list will be released to the public today.
Finance Minister Colm Imbert will open debate on the Finance Bill 2016 in the House of Representatives today.
The bill is expected to be debated in the Senate on Friday.
Included in the bill will be proposed amendments to Schedule II of the VAT Act 75:06.
Explaining the list will be made public once it has been laid in Parliament, the ministry reiterated, “The reduction in the rate of VAT (from 15)to 12.5 percent and the changes to the range of items, subject of VAT will become effective February 1, 2016.” In a previous statement on December 30, the ministry indicated the reason for the VAT changes taking place from February 1 was to give VAT registered companies, three weeks to make the necessary adjustments to the cost of their goods and services and to adjust their billing cycles In its December 30 statement, the ministry said, “The other taxation measures, namely the increase in the Personal Allowance to $72,000, the increases in the Green Fund Levy and Business Levy and the implementation of the Property Tax will be made effective from the beginning of 2016.” The ministry explained that although the Finance Bill and the amendments to the Property Tax Act will be introduced in Parliament in January, “these latter taxes and measures, i.e.
the adjustments to the Personal Allowance, Green Fund, Business Levy and Property Tax will be made effective from the beginning of 2016 because they are due and payable, and/ or effective, on a quarterly or annual basis, as opposed to VAT, which is due and payable on a bi-monthly basis.”