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HOME | GOVERNMENT MINISTRIES | DEPARTMENTS | EMBASSIES & CONSULATES | ABOUT GRENADA | MEDIA CENTER | CO
US
The registered person will charge VAT on the sale of his taxable goods and services and pay VAT on his
purchases. If the VAT charged on the sales is more than the VAT paid on his purchases, the difference should
be paid to the VAT Unit, Inland Revenue Division. If it is less, the person will be entitled to carry forward the
excess credit to the following tax period. If after three months, the excess for a given tax period is not used, then
it will be due for a refund. Before the amount is refunded, the VAT Unit, Inland Revenue Division will have the
authority to use the amounts to clear any other tax balances that the taxpayer may have before a refund is
processed.
MAIN FEATURES OF THE VAT
Registration
A person is required to apply for registration under the VAT Act if on the last day of any month.
The person exceeds the registration threshold of $120,000 in taxable supplies in the period of twelve
months ending on the day.
The person exceeds one third of the registration threshold in the period of 4 months ending on that day.
There are reasonable grounds to expect that the person will exceed the registration threshold in the
twelve month period commencing on the following day.
NB
If your turnover is below the threshold, you may still apply for registration. This is called voluntary registration.
The Minister would indicate when voluntary registration can commence.
Accounting and Records
One of the strengths of the VAT is that it requires registrants to maintain adequate books and records,
documenting business transactions completed for the period. Records must be up to date and must clearly
reflect the figures reported in the VAT return for a given taxable period. These books and records, including
electronic data, must include the following:
Bank Statements
Late payment of VAT would attract interest at the rate of 1.5% per month.
ECONOMIC AND SOCIAL IMPACT
Economic
The proposed VAT as an instrument of policy has proven to be very effective in promoting economic efficiency,
removing distortion of prices in the production process, and minimizing cascading of taxes.
The economic efficiency impact of the VAT relies on the fact that it is levied ultimately on consumption, not on
businesses. The input tax credit mechanism ensures that the VAT is not imposed on intermediate transactions
between businesses.
This means that the VAT will remove tax cascading as currently exists under the GCT. Cascading is the
imposition of consumption tax at various stages of the tax production – including costs, until the commodity is
sold eventually to consumers. VAT will be applied on the value added at each stage of the production process
but the mechanism allows businesses to claim a credit for inputs through the invoice – credit or input tax credit
method. This characteristic of the VAT allows Grenadian production of goods and services to be domestically
and internationally competitive as domestic costs are lessened and exports would not be taxed.
It is envisaged that VAT will transform the overall tax system making it simpler, reducing the cost of compliance
by businesses and, thereby, raising the effectiveness of tax collection. Under the VAT, the investment climate
would be strengthened as the full crediting of investment goods will lower the cost of such investment.
VAT, as designed, was intended to be revenue neutral based on the revenue implication studies conducted.
However, with the broadening of the tax base through the narrowing of exemptions and coverage of previously
untaxed supplies, the revenue yield from the VAT could be expected to be at least greater than the revenue from
the taxes the VAT would have replaced.
With the introduction of VAT, prices in the economy will increase for some goods and services while others will
reduce or remain the same.
The overall effect will be an initial price increase which will soon level off as businesses adjust to the new VAT
system and “old stock” is used up.
Social
The alleviation of poverty is a fundamental element of the Government of Grenada’s economic development
programme and strategy. In this regard, the proposed VAT took into account policies aimed at cushioning any
negative impact the VAT may have on disadvantaged and vulnerable groups. Hence the importance of the
exemption and zero rated schedules to the VAT legislation.
CONCLUSION
VAT as proposed is intended to revolutionize our tax system, be responsive to economic activity, and make a
real contribution to nation building. It is our belief that VAT will bring higher levels of efficiency in the tax system,
thereby creating a new culture of voluntary compliance amongst tax payers.
GLOSSARY OF TERMS:
ZERO-RATED taxable supplies: no VAT payable; input tax credits allowed for which VAT is applied at
the rate of zero percent.
place of supply: the country where a supply of goods or services is said to be made for VAT purposes
supply: selling or otherwise providing goods or services, including hire purchase and lay away.
supply of goods: when exclusive ownership of goods passes from one person to another
taxable person: any business entity that buys or sells goods or services and is required to be
registered for VAT - this can be an individual, partnership, company, club, association or charity
taxable supplies: all goods and services you sell or otherwise supply which are liable to VAT at the
standard, reduced or zero rate - whether or not you are registered for VAT
taxable turnover: the total value - excluding VAT - of the taxable supplies you make in the UK
(excludes capital items like buildings, equipment, vehicles or exempt supplies)
tax period: the period of time covered by your VAT Return, i.e., one calendar year.
CONTACT INFORMATION
For further information and copies of forms and information leaflets, you can contact the Inland Revenue
Division, Financial Complex, Carenage, or VAT Unit, Cnr Young & Scott Streets, St. George’s at;
Tel: (473) 435-6945/46, 435-9084/9085
Fax: (473) 435-9086/440-6621
Email: vat@gov.gd or gndird@spiceisle.com
Website: www.irdgrenada.com
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