Direct tax signed into law in Turks

A bill that will implement a value-added tax in the Turks and Caicos Islands was signed Thursday by the British Overseas Territory’s acting governor.  

A statement from Caribbean territory governor Ric Todd’s office indicated the signing follows a “consultative forum” held earlier in the month where “notably, no one voted against the bill”. There were five members of the forum voting for the bill and five members abstaining.  

The value-added tax will be in place in the Turks and Caicos from 1 April, according to the governor’s office.  

The United Kingdom-led interim government of the Turks and Caicos Islands has agreed that a wide range of items will be exempt from the value-added tax or have a zero-based rate, including fruit and vegetables, fresh meats, hurricane supplies, leases, rents and water and electricity bills.  

The tax exemption will also be extended to gasoline, propane and other fuels; bulk building materials; and any other items that are identified in the eight weeks before regulations for the tax law are finalised.  

“I hope that everyone who took part in this debate can put their difference of opinion behind them to help make the implementation of [value-added tax] as successful as possible,” said Acting Governor Patrick Boyle. “VAT implementation here is about providing our essential public services with a more predictable, regular and stable cash flow. 

“The forum made clear that they would like to see more examples of how VAT will affect the man or woman in the street and smaller businesses, as part of a wider education programme. We accept, too, that the VAT debate so far ended up being above their heads between government and TCI’s bigger businesses. We are working on this now.”  

Businesses in the Turks and Caicos Islands have been in revolt over a UK-backed plan to implement the value-added tax for the territory. The UK took over direct rule of the territory following a corruption scandal that led to the deposing of former Premier Michael Misick and criminal charges against a number of island residents.  

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.  

“However, we do have a major problem with this particular type of tax and its inappropriate nature for these specific islands and our unique economy at this time and at this specific point in its young development. We believe that the recent gains in economic sustainability will be lost with the imposition of this ‘boiler plate’, cookie cutter, tax system.  

“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.” 

Patrick Boyle

Mr. Boyle
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9 COMMENTS

  1. VAT is a particularly nasty form of taxation.

    I remember when it was introduced in the UK nearly 40 years ago and it has become a tax on living.

    Over the years the range of exemptions has been reduced and the rate is currently 20%. Now you seem to pay it on everything you need to live.

    The advantages for government (and probably why it was introduced in TCI) are that the rates can changed at will and businesses that are VAT-rated take care of the collection while those that are not simply pay the tax like the rest of us.

    It’s going to be see how TCI apply it. Over here the retailers have to include it in the sticker prices while a range of other businesses, wholesalers and trade suppliers can add to the bill.

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  2. The UK will be implementing the VAT on April 1st….and I thought the English didn’t have a sense of humour.
    TCI, the’ joke’s’ on you, unfortunately.

    Cayman, if we’re not more diligent in holding our Govt more accountable we may be receiving our surprise ‘Joke’ next April 1st!

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  3. Just a little bit of economic education here – VAT is INDIRECT tax. Yes, it is different from taxes we have in Cayman (which are called custom tariffs, but considering the volume of import they act more like a sales tax). But both VAT and custom fees are forms of INDIRECT taxation.

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  4. If the Caymanian voting population do not take more responsibility for the decisions that affect their daily lives…

    This is soon going to happen in Cayman, as well.

    Apathy, dis-interest and patronage…or, in other words, pure citizen laziness, is the root of Cayman’s current situation.

    When you have an elected Premiere, the most powerful position any local politician has ever held, who has appointed himself minister of finance as well…

    And has failed in the most crucial area of producing a balanced budget for the country, what else can you expect from the British Govt. administrators responsible for the fiscal affairs of Cayman ?

    The situation in TCI developed along different lines and much quicker than in Cayman but in essence…

    Cayman is hurtling headlong, rapidly, in the very same direction.

    Either Cayman’s citizens bring their politicians under some control or they will be the ones paying the VAT and other prices.

    The next general election would be a good place to start !

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  5. Stan…

    What planet you living on, mate ?

    Where did you get this fallacy that VAT is an ‘indirect’ tax from ?

    Value Added Tax (VAT) is a direct sales tax levied against all non-exempt goods and services, currently set at 20% in the United Kingdom.

    The fact that the businesses are responsible for collecting VAT for the government does not make it an indirect tax.

    All businesses set up for VAT are responsible for paying over the net VAT owed to Her Majesty’s Revenue and Customs (HMRC) or are due refunds on any over-paid VAT, similar to refubds of any overpaid income tax paid to HMRC.

    Is the British Goverment now going to set up a branch of HMRC in the TCI to implement the collection of VAT ?

    Or is the local TCI Govt. going to be tasked with setting up a tax regime to implement it ?

    Either way, a DIRECT tax has just been imposed in the TCI.

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  6. to firery:

    Nothing to say except please, study economics. Direct sales tax is non-sense. Sales tax is the main form of indirect taxation.

    Wikipedia is not perfect source of knowledge, but at least it is on the same planet as I am:

    http://en.wikipedia.org/wiki/Indirect_tax

    VAT is more difficult to manage for tax authorities. But honestly, if Cayman (e.g.) changed from Import Duties to VAT, considering the way local economy structured, there would be very low difference.

    I am against VAT in Cayman, mostly on the grounds of very little effect vs much higher administration costs.

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