Nine years after the last increase, government will once again increase the VAT (Value Added Tax) registration threshold, to reduce the number of businesses required to register for VAT.
This information was disclosed by Prime Minister and Minister of Finance, Roosevelt Skerrit during the presentation of the 2016/2017 National Budget on Tuesday.
According to him the VAT was introduced in March 2006 and at its introduction, a VAT registration threshold of $60,000 was set. This he said meant that businesses with annual turnover of more than $60,000 qualified to register for VAT.
Skerrit said effective 1st September 2007, his government increased the registration threshold to $120,000 for all types of businesses except hotels, commercial rental businesses and professional service providers.
“In that regard, and nine years after the last increase, Government will once again increase the VAT registration threshold, to reduce the number of businesses required to register for VAT,” he noted. “This new threshold will apply to all types of businesses that are engaged in the supply of taxable goods and services. The revenue cost of this increase in the threshold is estimated at $985,383 based on VAT declarations for 2015.”
Skerrit explained that those businesses that are now registered for VAT and which will fall below the new proposed threshold, will be deregistered.
“Therefore Madam Speaker, effective 1st September, 2016 the VAT registration threshold will be increased to $250,000 per annum for all categories of business. This we see as a first step in making it easier for smaller businesses to be tax compliant,” he noted.
Still the end customer will still be charged VAT so how are we the customers benefitting because if he is charged from the wholesaler he will still charge me so it shows that this doesn’t benefit the masses. Please reconsider!
Don’t worry .they will still collect because they don’t want to lose a penny.what would u do if u were in their shoes.no one wants to lose
Not sure if this is a good thing or a bad thing. Increasing the threshold will mean that i wont be VAT registrable if my annual revenues dont meet that new specified amount. Many may think thats awesome because they wont have to collect VAT for the state, however many do not realize that if you are VAT registered that you are able to claim the amounts spent on VAT back from the state, BUT YOU MUST BE VAT REGISTERED to do this. otherwise, the small shop keeper who makes less than $120,000 (current threshold) will pay VAT to the wholesalers of goods when restocking, but cannot claim the amount paid in VAT back because he isnt registered.
“Troof”, I understand your concern. However, pls be reminded that when you claimed that VAT back, your expenses for the year had to be reduced by the VAT claimed when arriving at your net income for the year. Now your expenses will be higher as it will include that VAT. This will result in your net income being lower and hence your taxes lower. So to me you have really lost nothing. It is more a question of timing and perception. You could claim every month versus waiting at year end to realize the gain. There is no loss to small businesses with this new measure. Instead, the administrative headache in relation to VAT filing would now be gone both for the small businesses and VAT office. Additionally, your customers would no longer have to pay VAT, so the total price for your goods or services will be lowered. Small businesses should therefore welcome this positive move.