A registered taxpayer is liable to account for VAT on all taxable supplies made, including those taxable supplies which are Zero rated (VAT charged at a rate of 0%).
(include Accounting for VAT brochure)
Following the receipt of a valid application for registration and the Comptroller is satisfied that you should be registered; he will within 21 days inform you in writing that you are registered.
The Comptroller will also send you a Registration Certificate which will show:
You must display the Certificate in a prominent position at your principal place of business.
If you carry on your activities at other locations you must display a certified copy of the Certificate at every location. The Inland Revenue Department (IRD) will provide you with certified copies of the Registration Certificates. There will be no charge for this service.
Once you are registered you must inform the IRD of any changes in the name (including business name or other trading name), address, place of business or nature of the taxable trading activity within 21 days of the change occurring.
This can be done by completing VAT Form 002 “Application to Change or Cancel Registration.”
If you have sold all or part of a business, you must inform the IRD within three calendar days.
You are required to display VAT inclusive prices on your goods and service.
Once registered, you must charge VAT to your customers on all standard-rated/taxable items.
You must issue VAT invoices to other registered businesses and sales receipts to non-registered persons. Invoices and receipts should have a proper description of goods or services purchased, the price, your Tax Identification Number (TIN), your purchaser’s TIN and the total VAT paid.
You are required to file your VAT return and pay any tax due to the IRD by the 21st of every calendar month. In the event that the 21st day falls on a weekend or a public holiday, the deadline for filing will be extended to the following working day.
Failure to file returns on time will attract a penalty of $250.00 and failure to pay on time, will attract a penalty of 10% of the tax due plus 1.25% interest per month.
If you foresee a reason that would prevent you from filing on time, you should write to the IRD before the deadline for filing and request permission to file your return late, stating the reason for your request.
If you have submitted a return with an error you should complete and submit VAT Form 003a “Disclosure of Error on VAT Returns Filed” accompanied by a letter stating the reason for your error to avoid any penalties (Note: changes or corrections must be made within three (3) years after the due date).
If you have challenges paying on time, you should contact the IRD to discuss your situation and arrange a payment plan.
Records are to be retained in English for a period of six years after the end of the tax period to which they relate. Where the accounts are produced and kept by means of a computer record, all documents, disks, and tapes are to be stored in a manner so as to preserve all such information. All changes made and the dates they were made should be noted in chronological order.
The records must be kept in a form, and contain information, which will enable the Comptroller to determine a registered person liabilities and obligations under the Act; or the amount of any refund to which the registered person is entitled.
The records must be completely up-to-date and must easily relate to the figures shown on the tax return for each tax period. A tax period is a calendar month.
Finally, as the IRD often undertakes audits to examine your financial affairs, verify you have paid the correct amount of tax and determine that you are complying with the tax laws, you would be required to be cooperative with staff to ensure that the audit goes smoothly.
Value Added Tax or VAT as it is commonly known is an indirect tax charged on taxable imports and the added value to taxable goods and services, supplied to one business to another or to a final consumer.
VAT is designed to ensure that most forms of consumer spending are taxed evenly and fairly.
VAT is not a tax on the seller for it is the buyer who pays the tax.
VAT is not an additional tax but it will replace the following taxes:
As goods and services progress through the production and delivery process extra costs are incurred. These costs include employee wages, transport, storage and other overheads plus profit mark up.
Such expenses or charges represent the Value Added to the goods or services.
VAT is charged when taxable goods are imported or when taxable goods and services are sold or provided.
VAT is added to the selling price of the goods or services. The VAT is, therefore, collected by the seller.
No. Only those businesses that are registered for VAT with the Inland Revenue Department (IRD) can charge VAT.
In order to charge VAT, a business must meet a particular Threshold. The threshold is the minimum sales of taxable supplies for a business in one year.
The threshold for Saint Lucia is $400,000.00.
Examples of taxable supplies include:
Charge VAT on the goods and services you provide that are taxable and
Claim the VAT you pay when you buy goods and services that are taxable for your business.
If you are not VAT-registered you cannot claim the VAT you pay when you purchase goods and services.
VAT is charged when a VAT-registered business sells to:
There are three rates of VAT, depending on the goods or services the business provides. The rates are:
Are There Any Benefits From Changing to a VAT System?
Yes. VAT will improve, simplify and modernize our tax system.
Businesses that are registered for VAT (known as taxpayers) will be able to set off the VAT they have paid on purchases, against the VAT they have charged on sales. Only the difference is paid to the IRD. Any excess may be available to set against future VAT liability or for repayment.
The flow of tax to the Government will be improved, since tax is collectible and payable at each stage in the transfer of goods or the supply of services.
Final Consumers: because VAT replaces and reduces the number of indirect taxes on the goods and services you currently buy or use, the final price of most goods and services may be reduced or remain the same. The prices of goods and services which currently have little or no taxes are likely to increase.
However, in order to not have an adverse effect on the lives of vulnerable groups, some goods will be exempted from VAT and others will be taxed at a rate of zero percent. This means the final consumer will pay no tax on these goods.
Businesses: If you are a registered business you will pay VAT on your purchases from another registered business. You will charge VAT on the sales you make, but you can offset the VAT paid against the VAT collected. The difference is paid to or available for refund from Government.
If you are not registered for VAT, you will pay VAT on your purchases from any registered business. You cannot charge VAT or claim credit for any VAT you have paid.
With the implementation of the Value Added Tax (VAT), a threshold has been set at which persons must be registered as VAT taxpayers. This guide provides information on who should be registered for VAT, who can register voluntarily, and why you will benefit from voluntary registration.
It also explains:
If you conduct a taxable activity that involves the supply of goods or services, you are required to register to charge VAT if you meet the registration threshold.
A “taxable activity” is defined under Section 6 of the VAT Act “as an activity which is carried on continuously or regularly by any person in Saint Lucia or partly in Saint Lucia, whether or not for profit, that involves or intends to involve, in whole or in part, the supply of taxable goods or services to another person for consideration.”
In other words if you are in the business of supplying or selling taxable goods and/or services, you are undertaking a taxable activity.
A. Businesses trading in taxable supplies must within ten working days (10) register with the Inland Revenue Department (IRD) if their taxable supplies or sales (goods and services):
meet or exceed the threshold of $180,000 in the previous twelve months or less; or
is reasonably expected to meet or exceed the threshold at the beginning of any period of three hundred and sixty five days (365).
Additionally, businesses must register if in the first three months of trading their taxable supplies exceed Forty five thousand dollars ($45,000.)
B. Promoters of public entertainment, licenses and proprietors of a place of public entertainment must within 48 hours of the event, if with a period of twelve or fewer months their annual taxable supplies is reasonably expected to exceed $180,000.00.
C. A person who is an auctioneer is required to apply for registration on the date the person becomes an auctioneer.
To avoid the imposition of a VAT burden on small businesses, the Government has decided that only persons whose turnover of taxable supplies meet or exceed the threshold need to register.
The threshold is set at $400,000 in any period of 12 months.
You must not attempt to avoid registration by artificially separating business activities to reduce your turnover.
If you do not register after you would have become eligible, the Comptroller will register you, and your date of registration takes effect on the date prescribed by the Comptroller. Therefore, you will be liable for all VAT due from the time that you should have been registered. This means that you will have to pay IRD for VAT on your sales from the date you should have been registered, even though you have not charged your customers VAT. Your sales from that period would be deemed VAT inclusive.
Failure to register or late registration, may result in you being penalized double the amount of tax due.
If you do not meet the registration threshold but you are trading in taxable supplies you may apply to the Comptroller of Inland Revenue for consideration to be registered.
Once registered, you will be required to charge and account for VAT. You will be able to claim a deduction for any VAT you have paid on your purchase of materials, stock and equipment used in your business.
If you decide to voluntarily register for VAT, you have exactly the same responsibilities as someone who must register. You must keep all required VAT records and issue VAT invoices and receipts. You also have to complete and submit a VAT Return monthly, along with your payment.
If you operate more than one business, the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.
However, if you operate separate legal entities, companies you do not need to combine the sales of those businesses to find whether you need to be VAT-registered.
If IRD decides that you have artificially separated one business into smaller parts to avoid registering, IRD will regard the entire business as a single taxable person and therefore the business must be registered.
Yes. You must apply for registration within ten (10) working days after the day on which you became required to be registered.
You can obtain of the Registration Form at the IRD's Office at the Blue Coral Mall, Castries or our Vieux Fort and Soufriere offices.
VAT REGISTRATION is FREE, so if you qualify, be sure to register TODAY.
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