The Inland Revenue Department (IRD) has set its sights on self-employed professionals who donât pay Value Added Tax (VAT).
Comptroller of the IRD Kelvin Pompey said the target group since 2016 has included doctors, lawyers, engineers, architects, surveyors and others who offer professional services.
âWe have been looking at their personal income tax filing â¦, their professional feesâ¦ We have been doing the necessary assessment of persons who have not been filing and we have a team going through the list of all persons who offer professional servicesâ, revealed Pompey.
Pompey, encouraging persons to file their tax returns and pay VAT, said that once a business or individual does not file a return, the law gives the IRD the power to do an assessment of the business and if that business is found owing, force them to pay the outstanding taxes.
He noted that the legislative changes that came into effect on May 1 increased the VAT threshold from $120,000 to $300,000.
âPreviously a business which becaume a VAT registrant had to have gross sales in a year of $120,000, but that has been increased to $300,000. It was long since recognized that the threshold of $120,000 was too low and it had too many businesses coming in who were not really yielding much in terms of the VAT net, so the increase in the threshold will take about 500 or 600 or even more of our current VAT registrants out of the netâ, explained Pompey.
He said that as a result, the VAT Unit would have a leaner, more manageable VAT list, allowing it to more effectively manage its business.
Currently the department is contacting persons to let them know if they are in or out of the VAT net as a result of the raising of the threshold.
âA business may have $200,000 sales in one year and $400,000 sales in another year and so we have been looking at their average sales over the last five years and contacting themâ¦ So, all business who are in the VAT net should continue to collect VAT, unless they are otherwise informed by the departmentâ, said Pompey.
The government is expected to collect an additional EC$10 million annually as a result of the change.