VAT To Focus On Top 10% of Companies
A top accountant yesterday backed the Government’s plans to slash mandatory Value-Added Tax (VAT) registrants by 1,000 firms, telling Tribune Business this would help to “maximize” revenues from the new tax.
Ed Rahming, managing director at KrYs Global (Bahamas), said that by increasing the annual turnover registration threshold from $50,000 to $100,000, the Government and its Central Revenue Agency (CRA) were ensuring they could focus all their attention on the 2,700 largest firms that account for 98 per cent of Bahamian GDP.
Looking ahead to VAT’s planned implementation come July 1, 2014, Mr Rahming described the deadline as “doable”, but acknowledged that the Government would face “challenges” in getting all the necessary information out to the private sector and Bahamian consumers.
And, while it was impossible to determine the likely level of fraud and tax evasion that would occur under a Bahamian VAT system, the KrYs Global chief said “the largest issues” were going to be unregistered sales by businesses; cash transactions that left no paper trail; and businesses with annual turnovers of around $100,000 attempting to avoid mandatory registration.
Describing ‘claims refunds’ (repayment of the VAT firms have paid on their production/distribution inputs) as “the Achilles heel” of any VAT system, Mr Rahming also acknowledged that the Bahamian economy’s cash-based nature made it “susceptible to VAT fraud”.
However, he defended VAT or some form of consumption-based taxation as the best option for the Bahamas and the Government’s financial needs. Mr Rahming argued that it was “more efficient in broadening the tax base”, increasing revenues and catching more people as taxpayers.business, tax