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Today’s Top Headlines




11% VAT Rate Confirmed For Turks And Caicos

by Phillip Morton, Investors Offshore.com

09 July 2012

The interim government in the Turks and Caicos Islands has confirmed in a recent White Paper the structure, rates and date of implementation for the islands' upcoming value-added tax (VAT) regime.

The White Paper says: “Given the state of public finances, this government is not considering a delay in the implementation of VAT, and therefore is fully committed to an implementation date of April 1, 2013." VAT will replace Communications Tax, Hotel & Restaurant Accommodation Tax, Vehicle Hire Stamp Duty, Insurance Premium Tax and the Domestic Financial Service Tax. When VAT is implemented, Customs Import Duty will generally be reduced by 10% - 15%.

The White Paper announces that the regime will feature an 11% standard rate, making the Turks and Caicos Islands' rate the second lowest among countries of the Caribbean Community (CARICOM), bested only by Haiti, with its 10% rate. Almost all CARICOM territories impose VAT at a rate of at least 15%, with the exception of Belize with its 12.5% rate. There is no sales tax however in the Cayman Islands.

The registration threshold, the minimum annual gross sales which will determine whether a business would be required to charge and collect VAT, is to be set at USD200,000 annually, other than for businesses already registered for Accomodation Tax, where the VAT registration threshold will be set at USD50,000.

For the sake of simplicity, the VAT system will only involve two rates, a standard rate, and a zero rate, which will be applied primarily to exports. The Paper says that should a future government decide to impose a higher rate of indirect tax on specific goods or services this should be undertaken by the introduction of a separate excise duty or tax.

To protect low-income taxpayers, a basket of essential food and household items will be exempt from VAT, along with healthcare and educational supplies, among numerous other items and services confirmed in the White Paper.

Recently defending the introduction of the regime, the interim government, installed by UK authorities in response to alleged corruption and unsustainable debt levels, said that the introduction of a VAT in the Turks and Caicos Islands offers "the opportunity to further strengthen the country's fragile recovery", under a regime that is "simpler, equitable and a stable source of government revenue".

Advocating the benefits of what is expected to be a tax-neutral reform, the government added: "VAT is a proven system across the Caribbean. It is straightforward to administer and is beneficial here in that this single form of taxation replaces five different sets of ordinances that both government and business need to keep abreast of."

TAGS: tax | business | value added tax (VAT) | sales tax | fiscal policy | international financial centres (IFC) | Belize | Turks and Caicos Islands | excise duty | food | offshore | education | tax rates | tax reform | services

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