The rate of Value Added Tax (VAT) in St. Vincent and the Grenadines will increase by one percentage point to 16% as of May 1, this year.
This increase in VAT from the current rate of 15 % was among a number of tax measures announced by Prime Minister and Minister of Finance Dr. Ralph Gonsalves during the presentation of his 2017 National Budget Address in Parliament in February.
Comptroller of the Inland Revenue Department (IRD) Kelvin Pompey is encouraging businesses to ensure that all their electronic systems including cash registers are changed to effect the new rate of VAT since all transactions done come May 1, must be charged at the rate of 16%.
Mr. Pompey is also urging businesses with items on shelves that are priced individually to begin changing the prices of those items so as to effect the new VAT rate as of May 1.
Meanwhile, Mr. Pompey is appealing to consumers to check their VAT receipts and invoices to ensure that the new change in VAT is being properly accounted for by businesses.
Prime Minister Gonsalves in his Budget presentation had said that the VAT is being increased in response to a 1% levy the government will be implementing on consumption within the State, to be used to capitalize a Contingency Fund which is being established pursuant to Section 72 of the Constitution.
The Prime Minister noted that this levy will aid in offsetting the cost of severe natural disasters that have been frequently affecting this country since 2010, and which has contributed to some 10% of the Public Debt.
Dr. Gonsalves said the revenue yield from this measure is estimated at EC$10 million per year. He said the government will undertake a review of this measure within three years.
