An Update on VAT!
This statement comes after retail businesses voiced concerns about the amount of effort that will be required to change all display prices immediately on January 1st. “We recognize that many businesses, such as retail grocers, will need extra days and perhaps weeks beyond January 1st to replace sticker prices on all shelved inventory. As such, they will be given until February 28 to complete the process,” Financial Secretary, John Rolle said. As of March 2015, enforcement of VAT inclusive price displays will become more absolute
Under the VAT Act, VAT registrants will have to display all prices inclusive of any amount of VAT that must be paid. In other words, the 7.5% VAT that is payable on a product must already be added to the price on display. “An item for example that sells today for $10 and has a VAT charge of 75 cents must have a display price of $10.75.” Mr. Rolle explained that this sticker re-pricing has to be done for all items in stock. He said that the flexibility that the VAT Department will take under the law will be to allow stores to have some items on display that still show their old price stickers. “However, to help with consumer education and to ease the transition, business will have to use bin tags, flyers and other means to openly advertise their VAT inclusive prices,” he said.
The Financial Secretary further added that “the VAT Department is urging that notices of price changes be posted in stores before the end of 2014.
As price tags are updated, customers may find some items with old stickers still in place. However, once the difference between the new and old stickers prices exactly match the amount of VAT that must be paid, consumers will not be allowed to exploit this difference, by demanding the lower prices. We will recommend to the government that the finalized VAT regulations reflect this policy rule.”
Despite the leniency on display pricing, the legal requirement for VAT registrants to issue proper customer receipts will be enforced from the beginning of the year. That is, the amount of VAT charged will always have to be shown on sales receipts.
The Financial Secretary indicated that the Ministry of Finance will begin to issue updated VAT guidance notes around the middle of October. These notes will expand on the transitional rule for pricing displays.