Government provides further VAT relief to local manufacturers

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Government provides further VAT relief to local manufacturers
PM Chastanet
PM Chastanet

(PRESS RELEASE) –The government of Saint Lucia continues to provide tax relief to the business sector, this time targeting local manufacturers.

Prime Minister Honourable Allen Chastanet moved a Motion in the House of Assembly on Tuesday, October 29th for an amendment to the Value Added Tax Act to Zero Rate the service of printing.

In introducing the Amendment, the Prime Minister explained: “Educational supplies as defined under the Value Added Tax Act, Cap 15.42 (VAT Act) including newspapers, trade catalogues and advertising matter, magazines and books and patterns and samples with no commercial value, are treated as exempt supplies under the Second Schedule of the Vat Act. When those same items are however produced or printed locally for a third party, the production or printing thereof is treated as a service and subjected to the standard rate of VAT.”

In other words, Prime Minister Chastanet simplified: “We have manufacturers who by virtue of the existing legislation are prejudiced in their own country. The fact is that those items can be imported and have no VAT on them, yet if these items are produced in Saint Lucia they vatable. We truly believe that this was an error because I cannot believe that either Government would want to be prejudiced against any of its local manufacturers.”

The Prime Minister further explained that since the VAT Act exempts the importation of such goods as per Schedule 2 and that similar goods are subject to VAT when produced in Saint Lucia, “this is viewed as rendering the service of printing such as of books, magazines, leaflets and invitations in Saint Lucia more expensive than the cost of importing a similar printing service and can render local suppliers of those services uncompetitive.”

The Prime Minister explained to Members of Parliament that goods, as defined by educational supplies under the Vat Act that are imported, will continue to be exempt from VAT while by zero rating the service of printing, the printing sector will be able to claim the total amount of input tax expended monthly to compete with imports of similar products.

The Amendment was unanimously supported by Members on the Government and the Opposition side.

During the 2017 budget debate, Prime Minister Hon. Allen Chastanet also addressed issues in the manufacturing sector concerning the burden from VAT on imported raw materials used in their production processes.

According to the Prime Minister; “in addition to the reduction in VAT from 15 to 12.5 percent, which went into effect from February 1 this year (2017), government had designed a VAT deferral system to minimize the impact of the VAT obligations faced by manufacturers.”

“This system will eliminate the VAT payments on imports of raw materials and no such payment is required subsequently to the extent that the manufacturer is allowed to claim the full input VAT,” he further explained.

The introduction of this system benefits manufacturers in that the previous challenges of sourcing funds to pay off import VAT in order to clear raw materials has been eliminated. This allows manufacturers to see a positive inflow of cash into the business prior to paying off import duties.

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6 COMMENTS

  1. G.W . I could not have said it any better. It is time Lucias open their eyes and pressure the government to give them an opportunity to own their very own local business, so the money can stay right here in st.Lucia.And not drain our economy, so we can stop begging the Chinese. and selling our soul to them.

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  2. The question is , who are the local manufacturers. Are they foreign companies doing business in St. Lucia and brand as local business. Will the public enjoy the same 12.5 percent also. I guess not. St. Lucians must be given the opertunity to own businesses ,not foreign companies claiming to be local, because the money does not stay in St.Lucia.

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    • st lucians are to busy minding each other business and bringing each other down and stabbing each other in the back when they have an opportunity to own a business whilst the foreigners excel. for instance look at all the Syrians the Chinese and the Guyanese they all help each other but if is a lucian that open a business "aa garcon i dont have money today uh you giving credit man?" or the doing you witch craft. time you check your self you have to close down but when the whit man coming and take all they want to get vex with the government

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  3. Bible in a Year
    October 30
    New Testament Verse of the Day:
    When the Roman officer who stood facing him saw how he had died, he exclaimed, "This man truly was the Son of God!"
    –Mark 15:39

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  4. Was that reduction made for Rick and Guy Mayers? Will there be a reduction in the sale of newspapers?

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