Transcript ABST - Antigua and Barbuda

Antigua and Barbuda Sales
Tax (ABST):
Presentation on draft ABST law
Basic concepts
taxable transactions:
 taxable supplies of goods or services
 taxable imports
taxable activities
taxable persons; registration requirements
place of supply (in A & B)
time of supply (when to pay & deduct)
zero-rated (0%) & exemptions (not taxable)
Taxable supplies
must be a supply
made in the course of the taxable activity
in Antigua and Barbuda
by a taxable person
(registered or required to be registered)
not exempt
Supplier  goods or services  to Recipient
(action) 
(thing supplied)
 (receipt)
= any transaction involving at least two parties:
a supplier makes a supply to a recipient of the supply
= the supplier does something to:
(a) cause something to pass from supplier to recipient; or
(b) cause some benefit to arise for recipient
= the recipient receives/acquires the thing supplied
Supplies may involve other entities
e.g. the supplier contracts with the recipient to provide
something to a third party but the tax consequences fall
on the supplier and the recipient
Supplies of goods and services
Supplies of goods: goods = tangible property (real or
personal); not only sales – includes leases, licences,
options to purchase, commodity futures
Supplies of services: everything else, e.g. service
industries (including lawyers & accountants), IP,
restrictive covenants, supplies of rights, etc
The distinction is particularly relevant for the
jurisdictional rules (place of supply & exports)
Taxable activity (broader than business)
any activity carried out on a regular or continuous basis
& involving the supply of goods or services
includes business, trade, manufacture, commerce, or
adventure in the nature of trade
licensing of copyright, leasing of property
includes non-profit activities (because aim is to tax
consumption)
one-off activities carried out with a profit-making intent
(e.g. acquire property to develop & sell)
Taxable activity (broader than business)
Doesn’t include:
 hobbies
& private activities
 employment
(employee is your value added)
 acting
as director of a company (except where engaged
to do so through a business, e.g. where lawyer or
accountant engaged to act as Director)
 government
activities that don’t involve supplying goods
or services to the public
Taxable persons
Person includes non-legal persons such as partnerships,
trusts, and unincorporated entities
must be registered if an annual turnover ≥ threshold
persons are registered, not activities:
if person has >1 taxable activity, all will count towards
threshold, only one registration
Exclude from turnover your exempt supplies, other nontaxable supplies, sales of capital assets, closure of a
business… …
Place of supply
Goods:

place where goods are when supplied
Services:

most are where supplier has place of business;

some are where supply effectively used or
enjoyed

special rules for rights and options (including
vouchers and phone cards)
Some supplies are not taxed
zero-rated (0%) & exemption (no tax)
difference lies in the input tax credit entitlements

no credits for exempt supplies

therefore the supplies are “input taxed”

undeductible input tax passed on in the price of
exempt supplies is hidden from consumers
Zero-rated supplies by
accountants and lawyers
Most common will be exported services

supply to a non-resident who is outside Antigua and
Barbuda when supply is made

services physically performed outside Antigua and
Barbuda

patent attorney services for rights to be used outside
Antigua and Barbuda
Not zero-rated if billed to a non-resident but provided to a
local person (e.g. global services contracts)
Imports
any import by any person  registration not
required
aim is to tax value of consumption in Antigua and
Barbuda  taxed charged on:
customs value + customs duty & other import taxes
+ freight & insurance
close links between ABST on imports and customs
duties: collection (by Comptroller) administration
(under customs laws); time & place of payment
(when & where the duty is paid)
Net basis for payments
Output tax = ABST paid on supplies
(not tax paid on imports)
Input tax = ABST included in price of acquisitions plus
ABST paid on imports
Net amount paid to IRD in each tax period =
total output tax – total input tax for the period
Adjustments for bad debts, changes to transactions
(cancellations, variations, volume discounts, etc), and
changes in use of assets also factor in to the calculation of
the net amount payable
Time of supply
When do you account for ABST output & input tax?
If time of supply is in the current tax period
Time of supply is earlier of
(a) when invoice issued
(b) when all or part of the price is paid
Related parties – time of supply is earlier of above or time
when goods are delivered or services are provided
Supplies that span periods (leases, licenses etc) – each part
treated as a separate supply  therefore pay periodically and
pay ABST periodically
Global basis for calculations
Net ABST payable is calculated for each tax period
Input tax on a particular purchase does not have to be
credited when the output tax is paid for the supply to
which it relates
Rather, the input tax incurred in a tax period is credited
against the output tax collected in that period.
Tracing is only required in a limited sense:
for determining whether an acquisition relates to making
exempt supplies or private purposes (and therefore is
denied an input tax credit)
Input tax credits for businesses
Registered businesses can reclaim the ABST incurred
on most business inputs (purchases & imports)
No input tax credits for:




private acquisitions
acquisitions that relate to making exempt supplies
cars (unless business = supplies of cars)
entertainment
Input tax on capital acquisitions is immediately
creditable – c.f. income tax depreciation
Apportionment
Input tax apportionment formula where inputs
relate to more than one type of supply
First: allocate inputs that are wholly related to one
type of supply or other
Then: everything else is deductible based on the on
the formula: A * B/C
A = input tax not directly allocated
B = value of taxable supplies
C = value of all supplies
ABST for unregistered businesses
Unregistered businesses, end consumers, and persons making
exempt supplies are all treated the same way

No output tax and no input tax credits

effectively input taxed
Exempt suppliers and small businesses add value that isn’t tax
(end consumers can also add value that isn’t taxed, e.g. cakes
& jams sold at a school fete, hobby proceeds)
Uncreditable input tax on acquisitions is passed on in the prices
charged to consumers
Effective rate of tax depends on proportion of price that
represents untaxed value added.
ABST for consumers
ABST ≈ a retail sales tax on consumer purchases of
goods and services in Antigua and Barbuda
Consumers:
pay ABST on imports
are ‘charged’ 15% ABST when they buy goods or
services from registered businesses
effectively pay partial ABST on purchases from
unregistered businesses
Structure of the Act
Basic provisions – definitions then application of the law
Administrative provisions
Schedules (zero-ratings & exemptions)
Regulations – to cover transitional issues, special cases,
format of tax invoices etc.
Plain English drafting
ABST Treatment:
taxable supplies and imports
To customs
$6
To IRD
+
$4
$10
-6
$4
+
$2
$12
- 10
$2
Importer
Wholesaler
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $10
Taxed Price: $110
Cost: $100
Value added: $20
Sell for: $120
plus ABST: $12
Taxed Price: $132
+
$8
=
$20
$20
- 12
$8
Retailer
Cost: $120
Value added: $80
Sell for: $200
plus ABST: $20
Taxed Price: $220
Consumer
Cost: $220
(includes $20 tax)
ABST: Supply to consumer is zero-rated
e.g. electricity subject to the basic charge
To customs
$6
To IRD
+
$4
+
$10
-6
$4
Importer
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $10
Taxed Price: $110
$2
$12
- 10
$2
Wholesaler
Cost: $100
Value added: $20
Sell for: $120
plus ABST: $12
Taxed Price: $132
+
- $12
=
$0
$ 0
- 12
-$12
Retailer
Cost: $120
Value added: $80
Sell for: $200
plus ABST: $0
Taxed Price: $200
Consumer
Cost: $200
(no tax)
ABST Treatment:
Supplies zero-rated until retailer taxed
e.g. macaroni sold by a registered restaurant
To IRD
$20
=
$20
$20
-0
$20
Importer
Wholesaler
Cost: $60
Value added: $40
Sell for:$100
Cost: $100
Value added: $20
Sell for: $120
Retailer
Cost: $120
Value added: $80
Sell for: $200
plus ABST: $20
Taxed Price: $220
Consumer
Cost: $220
(includes $20 tax)
ABST: Supply to consumer is exempt
(e.g. financial services)
To customs
$6
To IRD
+
$4
$4
$10
-6
$4
+
=
$2
$2
$12
$12
- 10
$2
Importer
Wholesaler
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $10
Taxed Price: $110
Cost: $100
Value added: $20
Sell for: $120
plus ABST: $12
Taxed Price: $132
Bank
Cost: $132
Value added: $80
Sell for: $212
plus ABST: $0
Taxed Price: $212
Consumer
Cost: $212
(includes $12 tax)
ABST: supply to retailer is exempt
e.g. financial services
To IRD
To customs
$6
+
$4
+
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $10
Taxed Price: $110
$21
=
$31
$21
-0
$21
$10
-6
$4
Importer
+
Bank
Cost: $110
Value added: $20
Sell for: $130
Retailer
Cost: $130
Value added: $80
Sell for: $210
plus ABST: $21
Taxed Price: $231
Consumer
Cost: $231
(includes $31 tax)
ABST Treatment:
all suppliers are under the threshold
To customs
=
$6
Importer
Wholesaler
Cost: $60
Value added: $40
Sell for:$106
Cost: $106
Value added: $20
Sell for: $126
Retailer
Cost: $126
Value added: $80
Sell for: $206
$6
Consumer
Cost: $226
(includes $6 tax)
What do you need to do?
identify whether you will exceed the threshold
if yes: will your supplies be taxable, exempt, zerorated, out-of-scope, or a combination
implement systems to ensure ABST is charged on the
right kinds of supplies
work out how your prices should change: subtract
taxes saved and then add ABST
get ready to print invoices and documents
be prepared for submitting ABST returns
What do you need to do?
ensure there are appropriate links to your accounting
systems to separate ABST from your income & costs
systems to capture input tax credit entitlements – to
ensure you hold ABST invoices and to determine
connection between inputs and any exempt or private
outputs
will your customers be registered?
will your suppliers be registered?
are you record-keeping systems up to the task?