Pacific

Islands

M O N T Hl Y

Business

[?]AT offenders targeted

By Ron Barden

THE Fiji government has taken a tougher stance on Value Added Tax (VAT) offenders in its VAT Decree 1991, effective July 1.

The government has extended the me for lodgement and payment and ;duced some penalties, but removed the ption of offenders applying to the lommissioner of Inland Revenue to ave the initial penalty reduced.

The draft legislation had required the iturn lodged and tax paid by the 15th f the subsequent month, and imposed a at 10 per cent penalty for each month le tax became outstanding. Lodgement f returns and payment of the tax must dw be made by the last day of the ibsequent month for which the return :lates. If not, an extra 10 per cent ecomes payable with another 2.5 per ;nt for every additional month’s delay.

According to the decree, the Com lissioner no longer has discretion to :mit or reduce the initial 10 per cent malty, but he does have discretion over her penalties. However, the decree also ates that he has power to extend the me for any requirement. The penalties e not tax-deductible.

Some offences are subject to court :tion and significant penalties.

Major offences include: 1 failure to keep or properly maintain cords, ' lodging a false return or statement, or tentionally misleading the Com issioner, falsifying records or receiving goods lowing the tax has been evaded.

Penalties for the above are a fine of up $l5OO and/or one year in jail for first nvictions, and a fine of up to $3OOO id/or two years in jail for subsequent nvictions.

Other offences include: failure to apply for registration, refusal or failure to furnish return or formation, failure of registered taxpayer to issue

a tax invoice, • failure to notify change of status within 21 days, and • knowingly advising the tax office of

tax payable.

Penalties for the above are a fine up to $5OO and/or three months jail for a first offence, a fine up to $lOOO and/or three months jail for a second offence, and a fine up to $l5OO and/or one years jail for subsequent offences.

The winners • Businesses carrying trading stock are the big winners because of credit ex tended to all customs and excise duties paid on stock acquired in the previous 12 months and on hand atjuly 1, 1992. The draft legislation had only allowed for three months credit. • Public bus services and sugar cane farmers are now categorised as zero rated rather than exempt, so they can now claim back VAT paid on inputs. • Low income earners will be given a rebate up to $3OOO on VAT paid on new

housing.

• Approved educational institutions will no longer pay VAT on importation of educational and teaching materials. • Taxpayers with turnover of less than $lOO,OOO per annum are now permitted to adopt the cash payments method of accounting and lodging of three-monthly returns.

Other changes include: • Raw and unprocessed food is now taxable if bought from a registered supplier. Therefore all produce sold through normal retail outlets will be taxable. But because agriculture and fishing industries do not have to be registered, tax may not payable if the goods are bought from an outlet dealing only with fresh agriculture or fishing

produce. This applies, for example, to

street market stallholders who have not opted to register. • Credits for VAT paid on motor vehicle purchases and running costs, and entertainment expenditure is allowed, if it is incurred in making taxable supplies.

Ron Barden is Business Services Manager for Price Waterhouse, Suva, Fiji