Inland Revenue reports difficulties on first day of VAT removal on foods

Speaking with, Velda Irish-Browne, the deputy comptroller of Inland Revenue, said some merchants reported having some technical issues.

“We’ve had a few tax payers who have encountered some difficulty with their systems in removing the VAT from the items, however, we have been assured that they are working tirelessly in getting that issue resolved, and we hope they would be able to reflect the VAT-free cost of the items at the point of sale,” Browne said.

However, Browne is optimistic that most of the difficulties would be resolved in a few days.

“Generally, we have some teething issues, but we expect in the next couple days those matters would be a thing of the past, and customers would see the VAT removed from all the items,” she said.

The deputy comptroller also commented on a suggestion raised on a local talk show that VAT on restaurant served meals should also be VAT-free. The policy position is that restaurants provide a food service, and it is this service that attracts the tax. Some callers believed, however, that it is still food being purchased.

Browne explained that while it is food being purchased, patrons are also purchasing services provided by restaurants, and in addition, taxes levied on restaurants are already lower than the normal 17 percent VAT.

“It’s two fold. It is a food, yes, but you also go there for the service, the ambience and for various things. As you are aware, the VAT that is charged in the restaurants is 10 percent… so there was a provision to provide some relief even before the removal of VAT on foods,” Browne responded.

Meanwhile, Browne indicated that the Consumer Affairs Department in collaboration with the Inland Revenue Department and Customs and Excise Department are actively working to ensure that consumers receive the benefits of VAT removal.

“We have Consumer Affairs going into supermarkets making sure that the VAT is removed from food items,” said Browne.

According to a Consumer Affairs officer, the Department is performing random inspections on the price of items within supermarkets and other food retail outlets.

“These [food] items are being checked within the point of sale systems to determine if the VAT has been removed. The Department will continue regular checks on the prices of all food items from today,” the Consumer Affairs officer indicated.

It is understood that businesses failing these random tests would be referred to the Inland Revenue Department and the Customs Department for “appropriate action”.

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