The specifics of how the value-added tax in the Turks and Caicos Islands will be implemented next year have been worked out by the United Kingdom-appointed governor’s office.
Turks and Caicos Governor Ric Todd signed regulations attached to the VAT law Wednesday. The law itself was signed in July.
The VAT will take effect in Turks and Caicos, a British Overseas Territory under direct UK rule, on 1 April, 2013.
“The publication of the regulations draws to an end the consultation on the introduction of VAT,” said Hugh McGarel-Groves, government chief financial officer. “Their publication now provides certainty to businesses across the islands and allows them to finalise their preparations over the next six months.
“The government has gone to great lengths to ensure that the range of VAT exempt and zero-rated items makes sure that the man in the street is not adversely affected by VAT. Most prices in the TCI should remain the same or even fall thanks to these measures. Indeed, we have actually expanded the range of exempted items to include essential fire and safety equipment, health supplies and, with one eye to the future, renewable
Significant resistance to the VAT tax proposal has arisen from members of the local business community in the Turks and Caicos Islands.
The Turks and Caicos Independent Business Council was formed recently by a broad group of individuals from all sectors of the economy and business community, according to a statement
sent out by the group.
“We have a common purpose in that we are all unified in our opposition to the introduction of VAT in the Turks and Caicos Islands,” a group spokesperson said. “We send a clear warning to [UK] Chancellor [of the Exchequer] George Osborne that we represent the interests of all the leading businesses in the country and indeed it can be said that our views are representative of virtually every business concern.
“We are deeply concerned about the expected negative effects of the hasty introduction of VAT into the islands’ tax structure. As business professionals we do not have a problem with taxation and recognise the need to fund government.
“This new VAT tax is not driven by a ‘grass roots’ initiative, but is a politically driven tax imposed upon us by distant bureaucrats based in Europe without effective due process and regard to our specific economy and its future development. One size does not fit all.”
Mr. McGarel-Groves sought to placate some of the ill feelings following Wednesday’s signature: “Please remember too, that VAT is a replacement tax designed not to increase the government’s tax take, but simply to regularise its income and to allow the public sector to benefit from a positive cash flow in a similar way to private business.”
The effective rate of VAT to be charged in the Turks and Caicos Islands is 11 per cent – the second lowest rate in the Caribbean region, after Haiti, and is the same level as Accommodation Tax currently charged in the TCI.
Only certain sized businesses must pay the tax. The VAT registration threshold for businesses not already registered for Accommodation Tax will be set at a turnover of $200,000 in annual gross sales, which is the highest threshold in the Caribbean.
The VAT registration threshold for businesses already registered for Accommodation Tax will be set at a lower threshold of $50,000 to mitigate against any loss of tax revenue from businesses with turnovers between $50,000 and $200,000, the government stated.
VAT exempt goods will include: basic food items including rice, flour, sugar, milk and eggs, chicken, fish and meat, fresh fruit and vegetables. In addition, infant supplies, personal hygiene products, hurricanes shutters, cement, steel, fuel, property leases and rents; property sales where stamp duty is applied, medical services, transportation, religious services and