Turks and Caicos Independent Business Council presentation on "VAT 101". VAT in Turks and Caicos.

1. PRESENTS
VAT 101

2. TONIGHT'S SPEAKERS
Drexwell Seymour, LIME - Moderator
Nick Haywood, PricewaterhouseCoopers
Ken Adams, DoIt Centre
Stacey Cox, Hotel & Tourism Association
Sam Slattery, Grace Bay Medical Centre
Edith Cox, The Graceway Group
Rev. Conrad Howell

3. Extrapolation of chart from Roe Report (Figure 1, Page 15) & TCIG 2012/13 Budget

4. NICK HAYWOOD
Partner
PricewaterhouseCoopers
Representative
Turks & Caicos Islands Society of Professional Accountants
WHAT IS VAT?

5. WHAT IS VAT?
•VAT is a tax that is added on to most things you buy,
both goods and services
•VAT is collected from you by businesses and paid to
Government
•VAT does not result in businesses paying more tax
•Businesses will collect VAT from you and me, and pay
VAT on what they buy. The difference between those
amounts will be paid to, or collected back from
Government.

6. HOW WILL VAT AFFECT
YOU?
• VAT will be added to most things you buy at 11%, so
prices will go up
• Most “Zero rated” items won’t go down in price, they
are already exempt from import duty
• Duty rates are expected to reduce by 11% on VATable
products, but VAT will be charged on imports, so the
cost of most imports will not reduce

7. WHY DON’T BUSINESSES
WANT VAT?
• VAT is more complicated than what we have now
• Businesses areprices highercustomers will buy less, because
VAT will make
concerned
• Even they don’t think it is rightwill TCI less tax under
VAT,
though some businesses
for
pay
• Small businesses costs initially bebusiness will back VAT
on purchases, so
won’t
to small
able to claim
increase

8. WHY IS VAT NOT RIGHT FOR TCI
• VAT is being designed for TCI to collect the
same amount of tax
• VAT is more difficult to enforce
• VAT IS CHANGE FOR THE SAKE OF CHANGE,
IT ADDS NOTHING EXCEPT COST FOR YOU,
COSTS FOR MOST BUSINESSES, AND COSTS
FOR GOVERNMENT

9. Stacy Cox
Association Executive
Turks and Caicos Hotel and Tourism
Association
HOW WILL VAT AFFECT
TOURISM AND ME?

10. •
• Employs more than 50% of the population
• Positive growth forecast for 2012

11. •
VAT rate of 11%, registrants of the Hotel and Restaurant Accommodation tax base will see almost no
change but the revenue base will be broader as all sales types will be taxable

12. • A sustainable tax base system on the
back of the consumers

13. Turks & Caicos Resort
Economic Council
Position on Value Added Tax
VAT

14. TCREC
Concerns on VAT in TCI
• Intellectual Justification Unknown
• Timing and Pace of VAT process
• Absence of BETA testing
• Groundless Revenue Projections

15. TCREC
VAT and the Maturation of the Condo-Resort
Model:
•The Condo-Resort Community has just come to the end
its first phase of development.
•Turks and Caicos is the “Superpower” in Condo-resort
development.
•In our second phase, likely to be based largely on client
with fixed incomes, VAT would weaken and could
destroy TCI’s dominant and competitive position.

16. TCREC
VAT Rate History in the Caribbean
Countries Introductory VAT Rate Current VAT Rate
Jamaica 10% 17.5%
Dominican Republic 6% 16%
Grenada 10% 15%
UK About 10% 20%

17. KEN ADAMS
CEO
Do-It Centre/Building Material
HOW WILL VAT AFFECT ME
WHEN I BUILD OR MAKE
REPAIRS TO MY HOME?

20. INCREASE IN COST TO CONSUMER
$16,601.54

21. SAM SLATTERY
Physician/Business Owner
Grace Bay Medical Centre
Member
National Health Insurance Board
HOW WILL VAT AFFECT MY
HEALTHCARE?

22. VAT EXEMPT
“Exempt supplies are those goods and services that are not
directly subject to VAT. VAT cannot be charged of the
sales of exempt supplies. Persons engaged in supplying
exempt goods and services cannot claim tax credit on
purchases associated with exempt supplies.”
“It is important to note that only goods and services will be
exempt not businesses or individuals”
From Value Added Tax White Paper July 2012

23. ZERO RATED
“Zero-rated supplies are goods and services that will be
taxable but at the rate of zero percent. Even though a zero
percent is charged on supplies to the consumer, a VAT
registrant is allowed to claim input credit on inputs used in
making zero rated supplies.”
From Value Added Tax White Paper July 2012
• Fortis will not charge VAT on your electricity
• Fortis will able to claim back any VAT they pay at the port
for anything associated with making electricity
• Could be a good thing as Fortis might be able to lower
their prices

24. VAT AND HEALTH CARE
• No VAT on Medical Services but there will be VAT on office
supplies etc.
• VAT is on goods and services not businesses
• Maybe VAT on medical disposables?
• Won’t be able to claim back the VAT paid
• Cost are expected to go up and if costs go up fees and
charges will also have to go up

25. PHARMACY
• Most Prescription items will be Exempt
• It appears over the Counter Medication, eg Cough and
Cold medicines, Vitamins and Health products will
increase in price as they will be subject to VAT
• Pharmacies can claim back VAT paid in proportion to
the amount of business that is VATable or Zero Rated
but not on Exempt services
• The complexity will require increased administrative
effort and increase costs

26. EDITH COX
CFO The Graceway Group
HOW WILL VAT AFFECT ME AT
THE GROCERY STORE?

27. As from April 1, 2013
Everyone in the Turks and Caicos will pay VAT.
(Value Added Tax), on all the goods and services they buy,
unless they are zero rated or exempt from VAT.
Goods imported in the Turks and Caicos after VAT will fall into
one of Four Categories:
•
Items which are duty free and are either zero rated, or exempt
from VAT.
•
Items which are duty free and taxable (subject to VAT)
•
Items which are dutiable and zero rated or exempt from VAT
•
Items which are dutiable and taxable – Subject to VAT
2

28. Items which are Duty Free and either
Zero Rated, or Exempt from VAT
•thell landed beingof thesethere will beno changeon
A things
cost
equal,
items, and
no effect
in
the calculated retail price. There will also be no
VAT charged at the till so the customer should see
no change in price as a result of VAT.
•Examples include: Fresh Fruits and Vegetables,
Fresh, Frozen and Chilled Meat, Fresh Whole
Chicken, Flour, Rice, Infant Formula, Corned Beef,
Milk, and Eggs
3

29. Items which are Duty Free, but
Taxable (subject to VAT)
•There will be no change in the landed cost of the
item or the calculated retail price but there will be an
additional 11% charged at the till on the selling price
of those items.
•Examples include: Frozen fruits and Vegetables,
Dried Fruits and Vegetables, Frozen Chicken parts,
Oats, Grits, Cream of Wheat, etc.
4

30. Items which are Dutiable and Subject to VAT
•May be a reduction on the duty charged on these items
•Landed cost will be reduced to the extent of the duty
reduction
•11% addition at the till, which depending on amount of
duty increase will most likely reflect a price increase
•Examples include: Majority of the Basic
Grocery Items including Bread, Water Health
and Beauty Aids, Soap, Detergent etc.
5

31. Items which are dutiable but Zero
Rated or Exempt from VAT
•May be a reduction in duty which will be reflected in
the landed cost calculation
•Calculated retail price will be lower than it is now to
the extent of the duty reduction
•Final price to the customer should also be lower
because there will be no VAT applied.
•Example include: Fish, Sugar, Propane
6

32. 7

33. REV. CONRAD HOWELL
VAT IS NOT SIMPLER, IT'S NOT MORE
EQUITABLE AND IT 'S NOT ANY MORE
SUSTAINABLE THAN DUTY.

34. VAT
As I see it
Simpler?
No,
Equitable?
No,
Sustainable?
No.
Burden? YES!

35. VAT • Paying Imp Duty on
arrival was and is simple.
• You will now have to
know the new Duty Rate,
the VAT Rate, and how
VAT is accounted for and
paid or reclaimed (if you
are Registered).
• It takes on a life of its
own especially as it
relates to accounting and
compliance.

36. VAT • When the burden of this
TAX is on the consumer,
It is not shared. As a
matter of fact, the cost of
collection is passed on.
• It is personal to the
consumer.
• It further weakens the
middleclass!
• It gives rise to poverty!

37. VAT • VAT introduction in Turks
& Caicos is like pouring
water into a leaking
Tank.
• It falls more heavily on
the poor, as has been
noted in various ways
here this evening.
• TCI does not
Manufacture or Export,
thus it is taxing goods
and services in TCI,
without an arm of

39. “We are not going to get growth in Europe or
Britain by introducing a new tax that would
actually hit people as well as institutions.
I do not think it is a sensible measure and I will
not support it.”
David Cameron attending USA for G8 Summit
18th May 2012