Transcript ABST - Antigua and Barbuda

Antigua and Barbuda Sales
Tax (ABST):
Presentation to Chamber of
Commerce & Employers’ Federation
What is the proposed ABST?
What does it mean to call ABST a consumption tax and a
broad-based, multi-stage transaction tax on value added?
 broad-based  charged on a wide range of goods & services
 multi-stage  charged at every level of the economic chain
 transaction tax  charged on each transaction
 on value added  tax credit for businesses (output tax –
input tax) means tax base ≈ salary & wages plus profits
 on consumption  passed on to consumers in price of each
consumer transaction
Terminology: “Supply”
… … a very broad concept
= a transaction involving at least two entities: the supplier
& the recipient of the supply
= any transaction if a recipient receives something
tangible/intangible, or is conferred with a benefit, because
something passes from supplier to recipient, or because
action of supplier causes benefit to arise for recipient
e.g. sale, lease, licence, creation of rights or obligations
can also involve other entities (someone to whom the
thing supplied is provided) but the tax consequences fall
on the supplier and the recipient
Two kinds of supplies:
supplies of goods and services
Goods = tangible personal property & real property
Supplies of goods = sales, leases, licences, options to
purchase, commodity futures
Supplies of services = any supply that isn’t a supply of
goods is a supply of services
Services includes service industries, supplies of rights, IP,
restrictive covenants, undertakings to do or not do
something, issue/transfer of shares, units in unit trust, etc.
Who is required to pay ABST?
On supplies:
Suppliers - but they collect it from recipients (customers)
by including it in the price of supplies
Only registered suppliers pay ABST on supplies of goods
or services in Antigua and Barbuda
Some registered persons who acquire services offshore
(“imported services”) must charge ABST to themselves
On imports:
All persons importing goods into Antigua and Barbuda (no
registration requirement for importers);
How ABST works for businesses
ABST is not intended as a tax on businesses.
ABST-registered businesses can usually claim back
ABST on their business inputs
(i.e. tax charged on imports or on goods and services acquired
from other registered businesses in Antigua and Barbuda).
ABST incurred on inputs is called INPUT TAX.
Input tax on capital acquisitions is immediately
creditable – c.f. income tax depreciation
ABST for registered businesses
Registered persons ‘charge’ ABST to consumers by
including it in their prices
ABST charged on supplies is called OUTPUT TAX
Input tax incurred on purchases is offset against
output tax on sales
Input tax that cannot be claimed back is also passed
on to consumers (because it is part of cost of sales)
ABST for registered businesses
ABST returns are submitted for each tax period
Net tax payable = OUTPUT tax – INPUT tax
Must have an ABST Invoice to claim input tax credit
Returns and net payments due 28 days after the end
of the tax period
Some suppliers will have a net refund (those making
zero-rated supplies)
 6 month carry forward; then payable after 90 days
 exporters – no carry forward; refunds payable after 90
days
Global basis for calculations
Net ABST payable is calculated on a global basis for each
tax period
Input tax on a particular purchase is not credited against
the output tax for the supply it contributes to
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)
ABST for unregistered businesses
Unregistered businesses cannot charge ABST on their
supplies of goods and services and cannot claim back the
input tax incurred on business inputs



No output tax and no input tax credits, therefore they are
effectively input taxed
Same as suppliers who make exempt supplies
in both cases, the value added by the unregistered or
exempt supplier is not taxed
The 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.
How ABST works for consumers
ABST operates like 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
prices will not go up by 15% because other taxes are
being removed – services will go up more than goods;
some prices will go down
Who will be registered?
To be registered you must:

be a person (includes partnerships, trusts, and
unincorporated entities)

be carrying on a taxable activity (wider than business)

have an annual turnover ≥ the registration threshold
A person with more than one taxable activity will only need to
be registered once: persons are registered, not activities.
Some things are not counted in measuring the threshold:
exempt supplies, other non-taxable supplies, sales of capital
assets, closure of a business… …
Documentation requirements
A registered person will be required to:

issue ABST invoices for taxable supplies to
other registered persons

issue sales receipts showing ABST paid on
taxable supplies to unregistered persons

advertise prices ABST-inclusive, stating how
much ABST is included
display ABST registration certificate at places
of business

Understanding ABST
TAXABLE supplies:
 ABST
payable; input tax credits allowed
ZERO-RATED taxable supplies:
 no
ABST payable; input tax credits allowed
EXEMPT supplies:
 no
ABST payable; no input tax credits
Zero-rated supplies
Exports of goods & services (because
consumed outside Antigua and Barbuda)
Supplies of going concerns
The Government proposes to include some
provisions to zero-rate basic needs
e.g. the basic basket of goods and the basic charge
for electricity and water.
Exempt supplies
Financial services
Sale and rent of residential property
The Government proposes to include some
provisions to exempt basic needs,
e.g. education, public health services, dental and
nursing services, funeral & related services,
charitable activities, etc.
Exemptions and Zero-ratings
Transactions are exempt, not persons
e.g. financial supplies are exempt, not financial
suppliers or institutions
a
sale of shares is exempt, no matter who the
supplier is
 insurance is exempt, even if not supplied by an
insurance company
 loans etc. are exempt
ABST Treatment:
taxable supplies and imports
To customs
$9
To IRD
+
$6
+
$15
-9
$6
Paper
$45
- 15
$30
Printer
Importer
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $15
Taxed Price: $115
$30
$30
Paper
+
$15
$60
$60
- 45
$15
Retailer
Consumer
Advertising
Goods
Cost: $100 Material Cost: $300
Value added: $200
Sell for: $300
plus ABST: $45
Taxed Price: $345
=
Value added: $100
Sell for: $400
plus ABST: $60
Taxed Price: $460
Cost: $460
(includes $60 tax)
ABST: Supply to consumer is zero-rated
e.g. electricity subject to the basic charge
To customs
$9
To IRD
+
$6
+
$15
-9
$6
Paper
Importer
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $15
Taxed Price: $115
$3
+
Paper
=
$0
$ 0
- 18
-$18
$18
- 15
$3
Printer
- $18
APUA
Consumer
Printed
Electricity
Invoices
Cost: $100
Cost: $120
Cost: $200
Value added: $20
Sell for: $120
plus ABST: $18
Taxed Price: $138
Value added: $80
Sell for: $200
plus ABST: $0
Taxed Price: $200
(no tax)
ABST Treatment:
Supplies zero-rated until retailer taxed
e.g. macaroni sold by a registered restaurant
To IRD
$30
=
$30
$30
-0
$30
Wholesaler
Importer
Macaroni
Cost: $60
Value added: $40
Sell for:$100
Macaroni
Cost: $100
Value added: $20
Sell for: $120
Retailer
Macaroni
300
Macaroni Consumers
Cost: $120 Cheese Cost: $230
(includes $30 tax)
Value added: $80
Sell for: $200
plus ABST: $30
Taxed Price: $230
ABST: Supply to consumer is exempt
(e.g. financial services)
To customs
$9
To IRD
+
$6
$15
-9
$6
+
=
$3
$18
$18
- 15
$3
Importer
Wholesaler
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $15
Taxed Price: $115
Cost: $100
Value added: $20
Sell for: $120
plus ABST: $18
Taxed Price: $138
Retailer
Cost: $138
Value added: $80
Sell for: $218
plus ABST: $0
Taxed Price: $218
Consumer
Cost: $218
(includes $18 tax)
ABST: supply to retailer is exempt
e.g. financial services
To IRD
To customs
$9
+
$4
$6
+
+
Cost: $60
Value added: $40
Sell for:$100
plus ABST: $15
Taxed Price: $115
=
$32
$32
-0
$32
$15
-9
$6
Importer
$32
Bank
Retailer
Cost: $115
Value added: $20
Sell for: $135
Cost: $135
Value added: $80
Sell for: $215
plus ABST: $32.25
Taxed Price: $247.25
Consumer
Cost: $247.25
(includes $32.25 tax)
ABST Treatment:
all suppliers are under the threshold
To customs
=
$9
Importer
Wholesaler
Cost: $60
Value added: $40
Tax: $9
Sell for:$109
Cost: $109
Value added: $20
Sell for: $129
Retailer
Cost: $129
Value added: $80
Sell for: $229
$9
Consumer
Cost: $229
(includes $9 tax)
Structure of the Act
Basic provision – definitions then application
of the law
Administrative provisions
Schedules (zero-ratings & exemptions)
Regulations – to cover transitional issues