Although Prime Minister and Finance Minister Roosevelt Skerrit has said that the discussion of the removal or lowering of VAT in Dominica is out of the question, one manufacturer is calling on the government to reconsider the application of the tax – at least at the island’s ports of entry.
Severin McKenzie, owner of Nature Island Paper Products Inc, has said VAT at the ports of entry is one of his company’s main challenges and “an injustice to manufacturers.”
“When we bring in raw material, we deal with five to 10 percent waste … we end up paying VAT on waste material and it is impossible to recover VAT on it,” he explained during a press conference on Friday.
Earlier this week PM Skerrit said the removal or reduction of VAT will not be considered by his administration. “I want to say to the certain groups and individuals who have been calling for the removal of VAT or exemption of VAT, they should not pursue that call if they are really interested in the well being of the country. If they want their government to be reckless and irresponsible, the consequences of these things can be detrimental to the well being of the country,” he said.
McKenzie indicated that he is not asking for the complete removal of VAT but is instead asking that the tax be applied only to the finish product. “We recover VAT on the finished product so the waste is going to waste,” he pointed out. “We have never asked for the removal of VAT; we only ask instead of paying VAT at the port of entry. We should pay it when we sell which would be a true application of VAT because we have added value to the product.”
According to him, paying VAT at the port has been a crippling factor to his operations since thousands of dollars have to be paid upfront for tax which is not recovered.
McKenzie agreed that VAT is important to the country but he said a manufacturer cannot be treated as an importer of finished products. “A manufacturer brings in his raw material, transports it to the factory, pays his debts, then finally sells it then takes 30-60 days to get paid … so it cannot be fair to pay VAT at the port. Government please reconsider this,” he pleaded.
He did admit that his company benefits from government concessions but stated they are not enough. “We get the concessions such as import duty of the machinery but if your raw material is coming from CARICOM there is no import duty anyway so the import duty is irrelevant,” McKenzie stated. “Then there is the concession on motor vehicles but this is also insignificant. And also there is the tax holiday for about ten years, however If you give me tax holiday for ten years and in the first ten years I do not make a profit, the tax holiday is useless. We are trying to see if we can translate it to when you start making a profit the tax holiday should kick in.”
Nature Island Paper Product is comemmorating two years of existence on Friday. The company manufactures toilet and tissue paper.