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Today’s Top Headlines

UK Minister Opens Door To Scrapping Turks And Caicos VAT

by Amanda Banks,, London

19 November 2012

A UK Minister’s response to a question tabled in the House of Commons by a fellow MP appears to have given the newly elected Turks and Caicos government the right to decide if it wants to scrap the islands’ controversial plans to introduce value-added tax (VAT) on April 1 next year.

Mark Simmonds, the recently appointed Parliamentary Under Secretary of State at the Foreign and Commonwealth Office (FCO) was asked by Labour MP Brian Donohue if he would reconsider the implementation of VAT in the Turks and Caicos Islands.

Simmonds replied that: “The introduction of value-added tax is a decision for the Turks and Caicos Islands government. The VAT Bill was signed into law on 18 July and will come into force on 1 April 2013.”

Rufus Ewing, the leader of the Progressive National Party, which was elected to power last week following three years of interim government in the Turks & Caicos Islands under Governor Ric Todd, is known to oppose the plans to introduce VAT.

Business leaders on the islands remain unconvinced by the news. A spokesman for the Turks and Caicos Independent Business Council (TCIBC) said: “On the surface Mr Simmonds appears to be supportive of the Turks and Caicos Islands but the question remains whether the Governor and FCO reflect his views. The real test will come when and if the new government attempt to abolish VAT and the Governor overrules them.”

The TCIBC together with many political leaders argue that, while VAT can work in a country that already has the necessary requirements for its administration, and a broad-based economy that would benefit from lower import duties, the small, single income (tourism) based economy in the islands is likely to be adversely affected by its introduction.

The 11% VAT rate, if introduced, will replace Communications Tax, Hotel & Restaurant Accommodation Tax, Vehicle Hire Stamp Duty, Insurance Premium Tax and the Domestic Financial Service Tax. It is thought that the resultant reduction in Customs Import Duty would be in the order of 10% to 15%.

TAGS: tax | value added tax (VAT) | Turks and Caicos Islands | United Kingdom | offshore

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