July 30, 2010
Premier of Nevis, the Hon. Joseph Parry discussed issues related to Value Added Tax (VAT), at a meeting with Permanent Secretaries, Head of Departments, the Ministry of Finance and technical persons.
A full discussion was centered on the existing taxes that would be included in the VAT process. It was noted that the proposed VAT will replace the Consumption, Hotel and Restaurant, Cable TV, Insurance Premium, Import Duty, Public Entertainment, Lotteries, Gaming Machine, Traders and Parcel Taxes and Vehicle Rental and Telecommunications Levies.
The Premier noted that all of the mentioned items were already collecting taxes.
According to the Premier, VAT will only be charged on businesses earning gross revenue of EC$150, 000 a year. Other businesses whose earnings are less, could voluntarily participate in the scheme.
It was also revealed that a number of basic goods would be zero-rated in order to make them more affordable for consumers. Among the goods under consideration for exemption from VAT, were milk , infant formula, diapers, rice, sugar and certain medicines for chronic diseases such as hypertension, diabetes and cardiovascular disease, among other basic and important supplies.
A Ministry official revealed that a number of transactions including the sale of real estate property attributable to a dwelling subject to stamp duty may be exempt from VAT, while all goods for export are to be exempt from the application of VAT as well.
Meantime, during the meeting Permanent Secretary in the Ministry of Finance, Mr. Laurie Lawrence explained that the revenue sharing process that will be used to determine payments. He revealed that a basic revenue sharing of the VAT system would be important because St. Kitts-Nevis has free movement between the islands.
Mr. Lawrence noted that the method for revenue sharing was based on a GDP with a population constraint. He explained that the population shares between St. Kitts and Nevis were 76 and 24 percent respectively, the GDP shares were 79 and 21 percent and the revenue share of either island should not depart by more than 2 percentage points from its population share.
“As part of the procedure for the joint clearing account are to be the Financial Secretary in the Ministry of Finance-Nevis”, noted Mr. Lawrence and he added that the signatories for the Refunds Management Account would be the Comptroller in St. Kitts and the Deputy Comptroller in Nevis who would take care of the funds.