Manufacturers To Get Sales Tax Deferral

Details

Economy

Thursday, 20 December 2012 02:39

By Carol Williams

Antigua, St. John's - Manufacturers are to be allowed to defer paying sales tax on raw materials and supplies until their products have been sold.

But only those that are registered and meet specific requirements will benefit from the arrangement that takes effect in the first quarter of next year for an initial 12 months.
 

Manufacturers will still be required to complete a customs declaration warrant that reflects the sales tax amount, import duty, and other taxes that are due and payable at the time of importation.

However, the Customs & Excise Department will release the raw materials and inputs without requiring immediate ABST payment.

Minister of Finance & the Economy Harold Lovell said the mechanism was devised in consultation with representatives of the sector.

"Having worked with the manufacturers to establish this arrangement, the Government is assured that it will bring significant benefits to businesses in the manufacturing sector by providing cash flow relief during the period of producing the finished goods," he said in delivering the Estimates of Revenue and Expenditure for 2013.

"The facility applies only to businesses engaged in economic activity that adds value by transforming the imported raw materials and inputs into a finished product. Businesses engaged in importation of goods for resale, even if they are the same as the inputs used by manufacturers, will not be eligible for this facility."

To qualify, manufacturers must first provide a list of the raw materials and inputs used in the production process.

The list has to be submitted to the Customs and Excise Department with a copy sent to the Office of the Financial Secretary when the application is made to access this facility.

Customs will allow the manufacturer to clear the imported raw materials and inputs only after verifying that the applicant is a bona fide manufacturer who is registered with the Department of Trade, Industry and Commerce.

To retain access to this benefit, manufacturers must file their ABST and PAYE returns and pay any taxes due to the Inland Revenue Department on a monthly basis as required.

Those who fail to meet these obligations will be automatically barred from accessing the facility.

Also, any manufacturer who fraudulently accesses the facility will be subject to the penalties and fines provided in the ABST and Customs legislation.

The arrangement is to be assessed after the first year of implementation to determine its effectiveness and the overall impact on Government’s revenue.

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The sales tax is projected to yield $241.4 million next year, nine percent more than in 2012. Minister Lovell said further that a solution is still being sought on the possibility of offering  preferential electricity tariffs to those involved in manufacturing.

A committee comprising  representatives of the Antigua & Barbuda Investment Authority, the Antigua Public Utilities Authority, the Antigua & Barbuda Employers Federation and Government is due to  meet to determine the feasibility of an arrangement that offers discounted rates to manufacturers, he added.

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