VAT Consultant: Get facts straight!

Radio talk shows have been cautioned not to propagate incorrect information as regards the Value Added Tax (VAT). VAT Consultant, Michal Andrews, speaking at a special forum organized by the Chamber of Industry and Commerce on Wednesday, said that while call-in programmes were good for educating the masses, it was important that they give the right information.

The Accountant who has over 23 years experience in taxation, said that on Tuesday, October 3, she had heard speakers on a call in radio show informing the public that although prescription medicine is VAT exempt, once the drug was bought over the counter without a doctor’s prescription, the consumer would have to pay VAT on the items.{{more}}

This Andrews advised is incorrect. She explained that as long as a drug is classified as a prescription drug, whether it is bought over the counter or in accordance with a doctor’s prescription, it will be exempt.

Andrews, a Trinidadian, also discussed other key areas related to the implementation of the VAT including the difference between exempt and zero rated supplies, VAT invoices and sales receipts, rules relating to supplies and assessments, and interest and penalties.

The tax consultant explained that from the consumer’s point of view, there is no difference between zero rated and exempt supplies as they will not have to pay VAT in either case. However, for the supplier, there is an important difference. With exempt supplies, no input tax credit can be claimed, whereas for zero rated supplies, input tax credit can be claimed.

Andrews’ presentation was supported by members of staff of the VAT Implementation Unit including Consultant Manager, Alma Dougan.

In his opening remarks, President of the Chamber of Industry and Commerce Martin Bollers expressed concern that even with the four-month delay announced for the implementation of Value Added Tax (VAT), this still may not be enough time for some businesses to get ready. He however urged members to work towards putting things in place as if January 1st were still the deadline.

The Value Added Tax Act 2006 was passed in the House of Assembly on Monday. Registration of companies who qualify under the Act will commence later this month. All eligible companies have to be registered by March 1, 2007.