ST LUCIANS are preparing to capitalise on the promised reduction in the Value Added Tax (VAT), with a government statement Thursday encouraging business owners to ensure that the adjustment takes effect from midnight January 31.
Comptroller of the Inland Revenue Department Sophia Henry also urged consumers to remain vigilant and review their VAT invoices and sales receipts when transacting with VAT registered businesses.
Last November, Prime Minister Allen Chastanet announced a 2.5 per cent reduction in the rate of the VAT, saying it will result in an estimated EC$52.5 million being pumped back into the hands of St. Lucians annually.
The VAT reduction which takes the rate from 15 to 12.5 per cent was one of five components of the “Five to Stay Alive” programme first announced in June last year when the now ruling United Workers Party (UWP) campaigned for the June 6 general elections. The UWP had promised the electorate “a restructured tax regime that will be less burdensome but without compromising the revenue base”.
The Inland Revenue Department statement reminded the public of the recent legislative amendment to the VAT Act which reduces the standard rate from 15 per cent to 12.5 per cent, effective February 1.
Chastanet said the VAT introduced during the term of the former administration, affected the entire island on a daily basis destroying businesses and drained consumers to the core even as he indicated that the decision to reduce the tax was not done lightly.
“We took time to review the current VAT system. We commissioned a study by Ernst and Young and they undertook a comprehensive review of the VAT. Combined with the CDB (Caribbean Development Bank) report and our discussions with various financial agencies such as the ECCB (Eastern Caribbean Central Bank) and IMF (International Monetary Fund) we received several recommendations on reforming the VAT system,” the Prime Minister said.
Parliament met last November to give effect to the new VAT rate in addition to the reinstating of the airport tax.