Transcript The Antigua and Barbuda Sales Tax ABST

The Antigua and Barbuda Sales
Tax
ABST
Not an Additional Tax but
Part of the Reformed Tax System
The History of Value Added
Tax (VAT)
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France 1948
Brazil 1967
Expands to 63 countries between
1970/80
Currently 136 countries have a
VAT
The VAT today
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4 billion people pay VAT (70% of world
population)
Annual VAT revenues are more than US$18
trillion
25% of annual total tax revenue
VAT has replaced retail sales and other taxes
Denmark (25%)
Nigeria, Panama, Taiwan, Singapore (5%)
VAT presence in the
Caribbean
In operation
– Barbados, Dominican
Republic, Haiti, Jamaica,
and Trinidad & Tobago
Being introduced
– Dominica, Antigua and
Barbuda, Guyana, St. Lucia
and St. Vincent and the
Grenadines
Being re-introduced
– Belize and Grenada
The ABST
A Value Added Tax-type consumption tax
A broad-based tax on consumption
A tax on supplies (goods and services)
A multi-stage transaction tax
Will begin with a high threshold
Only a small number of registrants initially
Registrants and Customs will charge the ABST
on behalf of the government
Registrants will off-set ABST paid on purchases
and other costs against ABST charged on sales
Why ABST
OECS Reform Commission recommended a VAT
for member countries as part of general tax
reform programme
Consistent with international and WTO rulings
regarding the elimination of consumption taxes
(Customs service tax?)
Universal application (everyone pays)
Introduction of the ABST is a good opportunity to
revamp Inland Revenue and Customs
administrations
Not a New Tax but Part of a Reformed Tax
System
Economic Implications
Expected to deliver long term economic
improvements
Will help facilitate Antigua and Barbuda’s
transition to the FTAA
Replacement of multi rated consumption tax
with single rated tax on domestic and imported
goods
Most prices for goods should remain relatively
stable
Services will be subject to ABST
ABST Revenue Impact (annual)
The largest suppliers
Large turnover
A lower threshold of for hotels and
restaurants
Revenue raised $157m
Taxes repealed $120m
Net ABST
Revenue
$37m
What will be subject to ABST?
The Government proposes an ABST on:
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Imports into Antigua and Barbuda; and
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Most goods & services supplied in Antigua
and Barbuda
Goods: physical objects such as furniture,
clothing, appliances and including food
products.
Services: services such as those provided by
lawyers, architects, plumbers, and mechanics
Taxes to be Replaced
Consumption tax
Telecommunications tax
Restaurant and catering services tax
Hotel (bed-night) tax
Hotel guest tax
Hotel guest levy
Supplies not Subject to ABST
Zero rated supplies (exempt with credit)
No ABST on sales but refunds available for
ABST paid on inputs
Usually exports
Exempt supplies (exempt without
credit)
No ABST on sales but no refunds of ABST
paid on inputs
Supplies not subject to ABST
Items included in the basic basket of goods
Medical services including dental, optical and
veterinary services
Drugs and medicines sold in pharmacies and
medical centres
Services provided in nursing homes for persons
who need permanent care
Educational services including both private and
state provided education
Residential rents and sale of residential real
property
Supplies not subject to ABST
The basic charge for water and electricity
Textbooks approved by the Ministry of
Education
Day care services
Transportation of passengers by land or
by ferry between Antigua and Barbuda
Financial services
International transport services
The services of funeral directors and
undertakers
Basic Basket of Goods
Macaroni
Chicken
Mackerel
Salt Fish
Oats
Local Catch
Cheese
Orange Juice Cocoa
Toothpaste
Soap Powder Toilet Paper
Crackers
Soda
Eggs
Baby Wipes
Ling Fish
Infant Formula
Basic Basket of Goods
Peas & Beans
Tea
Red Herring
Tuna
Cereal
Biscuits
Luncheon Meat
Black Pepper Insecticides
Mosquito Coil
Malt
Cornmeal
Rice
Flour
Sugar
Milk
Salt
Butter
Basic Basket of Goods
Margarine
Corn Meal
Refined Edible Oil
Tuna
Cereal
Biscuits
Soap
Petroleum
Products
Pharmaceutical
Goods
Effect of ABST on Prices
Basic basket of goods will not be subject to
ABST
ABST rate will be around 15%
Current rate for consumption tax on most
goods is between 5% and 50%
Prices for many goods should remain relatively
stable
Consumption tax is hidden
ABST is visible
Prices for taxable services should rise slightly
with ABST
Prices quoted will be ABST inclusive
Who Will be Registered?
Business with the largest annual turnover
(supply of both goods and services)
Many (not all) hotels and restaurants
Administrative capacity of IRD continues
to increase and registration threshold will
be lowered to include most businesses
Remember registered businesses will
charge the ABST to consumers and
recover the ABST they pay in the
production of the goods and services
Collection & returns
Monthly ABST returns
ABST payable = ABST charged – ABST paid
Net amount is paid to the Commissioner
IRD
* No credits for input tax unless registrant has
an ABST invoice issued by the supplier
ABST payable on imports is paid to the
Comptroller of Customs at time of import
Documentation Requirements
A registered supplier will be required to:
display ABST registration certificate at places of business
issue ABST invoices for taxable supplies to other
registered persons
issue sales receipts showing ABST paid on taxable
supplies to unregistered persons
advertise prices as ABST-inclusive
final price will break down original price + ABST to equal
final price
Registered vs Non Registered
Prices
Registered will charge ABST
Non Registered will not charge ABST
Registered will receive credit for ABST
paid
Non Registered will not receive credit
Registered can negotiate better prices
Historically registered price per item is
similar to non registered
ABST Payments/Refunds
Tax period is one calendar month
Net ABST payable 21 days after tax period
ABST on imports payable at time of import
to the Comptroller of Customs
Negative balances will be refundable if an
amount remains after offsetting against
next 6 tax periods
Exporters can claim refunds without
carrying forward into future months
Who will pay the ABST?
The ABST will be
paid by
consumers…
not by suppliers!!!
Decisions Under Consideration
Registration threshold
ABST rate
Implementation date
Transition rules
Zero rated supplies (exempt with creditexporters)
No ABST on sales but refunds available for ABST
paid on inputs
Exempt supplies (exempt without credit)
No ABST on sales but no refunds of ABST paid on
inputs
Lead up to ABST Implementation
Legislation amended, finalized and passed
IRD will assist in registration process
Identification of registrants
Completion of registration forms
Delivery of registration certificates
IRD will continue the education campaign
Pamphlets and brochures to be issued shortly
Registrants should run down inventory to avoid (as
much as possible) the application of consumption tax
and ABST to supplies in post implementation period
Prices must be advertised as “ABST” inclusive
Cash registers re-programmed to break down ABST as
part of the price
Maintain a controlled supply of ABST invoices for sales
to registrants
Concluding Remarks
ABST White Paper and proposed draft legislation
launched September 16
White paper, legislation and ABST presentations
available on antigua.ab.gov.ag
Consultation sessions will continue
Implementation plan developed and executed in
other jurisdictions and is being used as
foundation for ABST introduction
Local resources for implementation have been
made available
International/regional assistance has been made
available (technical and IT)
Adequate lead time to ensure successful
implementation