Businesses have to roll out the three VAT systems from today – Patel

Suva Retailers Association President Jitesh Patel says there were some teething problems however most businesses are ready to roll out with the three VAT rates from today.

Patel says there can be some human error in terms of charging the VAT and is urging the customers to talk to the staff if they have any doubts.

As per the announcement in the Revised National Budget, 21 essential items will become VAT zero-rated, there will be a 15% VAT on 21 items while the 9% VAT will remain on certain items.

The items which will become VAT zero-rated include sugar, flour, rice, canned fish, cooking oil, potatoes, onion, garlic, baby milk, powdered milk, liquid milk, dhal, tea, salt, kerosene, cooking gas, soap, soap powder, toilet paper, sanitary pads and toothpaste.

Minister for Economy, Aiyaz Sayed-Khaiyum had stated in the budget address that the increase in VAT to 15% will cover goods and services that previously attracted ECAL, such as prescribed services, white goods and motor vehicles, and will apply to all turnover in excess of $100,000.

ECAL will be removed and replaced by the adjusted VAT rate of 15% for these items.

Sayed-Khaiyum says the tax on an item that carried 9% VAT and 5% ECAL would increase by one percent.

The additional list of goods and services to be taxed at 15% VAT includes alcohol, tobacco, textiles, clothing & footwear, perfumes, jewellery, watches, stereos and sound systems and other electrical equipment, and professional services such as legal and accounting, management and consultancy, architectural and engineering, scientific research and development, advertising and market research, veterinary activities and other professional, scientific and technical activities.

Patel says they were concerned about the short time frame but after speaking to FRCS and the FCCC, they have found solutions on how they can best meet the requirements.

He says most companies who supply programs to the businesses for their till systems have adjusted these according to the new requirements.

Patel adds he has spoken to some businesses who have indicated that they will not increase the prices on those items which will have a 15% VAT because this is a busy period.

He says they will wait for the new stocks to come in.

However Patel says these businesses will still pay the 15% VAT to government and in the process take a 6% hit.