A review of the Value Added Tax system which Grenada implemented in February 2010 has identified a number of areas for improvement and enforcement for those businesses and individuals which violate the law.
Conducted by the Audit Department in the Ministry of Finance, one recommendation is that a comprehensive education process be undertaken to provide officers who originally were not part of the VAT process with knowledge of the requirements of the VAT Legislation and the existing policies and procedures.
Despite the observation, in general, the Audit found that the activities in respect to the administering of VAT were in accordance with the Laws of Grenada and all the other established policies and procedures. The audit report also recommended that there should be proper supervision over the manual filing of VAT returns and other documentation to ensure that taxpayer’s records are complete and up-to-date.
With regard to granting time before the waiver of a fixed penalty, the audit recommends that all waivers should be adhered to in the accordance with law. The report which was tabled at the 10 December sitting of the House of Representatives said that letters were issued granting “one off” waivers of late filing penalty to three taxpayers. However, there was no evidence that an extension of time was granted as stipulated in the Act.
Other recommendations include enforcing clauses relating to garnishing and seizures for those who failed to comply with the VAT law, and establishing a policy of management reporting on compliance performance.
In the area of registration, it was recommended that a mechanism be created to identify the new businesses which are registered at the Corporate Affairs and Intellectual Property Office so they are captured on the VAT list.
VAT is a tax on consumption and it is charged on the value of imports and on the value added on goods and services supplied by one business to another or to the final consumers. For the year ended 31 December 2012, the amount collected from VAT was EC$77 million on domestic transactions and EC$79.1 million on international transaction.