1 / 33

Antigua and Barbuda Sales Tax (ABST):

Antigua and Barbuda Sales Tax (ABST):. Presentation on draft ABST law. What do all these concepts mean?. A broad-based, multi-stage transaction tax on value added broad-based  charged on a wide range of goods & services multi-stage  charged at every level of the economic chain

dbeckett
Download Presentation

Antigua and Barbuda Sales Tax (ABST):

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Antigua and Barbuda Sales Tax (ABST): Presentation on draft ABST law

  2. What do all these concepts mean? A broad-based, multi-stage transaction tax on value added broad-basedcharged on a wide range of goods & services multi-stagecharged at every level of the economic chain transaction tax charged on each transaction value added tax credit for businesses (output tax – input tax) means tax base ≈ salary & wages plus profits A consumption tax consumption  passed on to consumers in price of each consumer transaction; consumers cannot claim it back

  3. What is a Supply? = a transaction involving at least two entities:a supplier who makes a supply to a recipient of the supply = the supplier does some act that:(a) causes something to pass from supplier to recipient; or(b) causes some benefit to arise for recipient = the recipient receives something tangible/intangible OR is conferred with a benefite.g. sale, lease, licence, creation of rights or obligations • Supplies may involve other entities (to whom the thing supplied is provided) but the tax consequences fall on the supplier and the recipient

  4. Two kinds of supplies:supplies of goods and services Supplies of goods= sales, leases, licences, options to purchase, commodity futures: so long as they are supplies of tangible personal property & real property Supplies of services = any supply that isn’t of goods is a supply of services; e.g. service industries, IP, restrictive covenants, supplies of rights, lending money, etc. Q:Does it matter whether a supply is of goods or services? A:Yes; particularly for place of supply rules & export rules

  5. Hotels & restaurants • Restaurantssupply & servefood & beverages:this is a supply of goods • Hotels supply services (serviced accommodation, internet access, telephone services, tours) and goods (food and beverages, use of yachts/diving equipment etc) • Hotels often supply rights to their goods & services in a separate transaction from the supply of the goods or services themselves: the rights are taxed if the goods or services themselves would be taxed

  6. Who is required to pay ABST? On supplies: • RegisteredSuppliers collect it from recipients (customers) by including it in the price of supplies • Some registered persons who acquire services offshore (“imported services”) must charge ABST to themselves On imports: • All persons importing goods into Antigua and Barbuda (no registration requirement for importers);

  7. How ABST works for businesses • ABST-registered businesses claim back ABST on most of their business inputs (input tax)(input tax includes tax paid on imports and on goods/services acquired from other registered businesses). • No input tax credits for private acquisitions, for purchases that relate to making exempt supplies, nor for cars (unless business = supplies of cars) • Input tax on capital acquisitions is immediately creditable – c.f. income tax depreciation

  8. ABST for registered businesses • ABST charged on supplies = Output Tax ABST returnsare submitted for each tax period Net tax payable = OUTPUT tax – INPUT tax • Input tax that cannot be claimed back is also passed on to consumers (because it is part of cost of sales) • Must have an ABST Invoice to claim input tax credit If ABST invoice not received until a later period, the input tax is deducted in the later period

  9. Global basis for calculations • Net ABST payable is calculated for each tax period • Input tax on a particular purchase does not have to be credited when the output tax is paid for the supply to which it relates • Rather, the input tax incurred in a tax period is credited against the output tax collected in that period. • Tracing is only required in a limited sense:for determining whether an acquisition relates to making exempt supplies or private purposes (and therefore is denied an input tax credit)

  10. ABST for unregistered businesses • Unregisteredbusinesses cannot charge ABST on their supplies of goods and services and cannot claim back the input tax incurred on business inputs • No output tax and no input tax credits, therefore they are effectivelyinput taxed • Same as suppliers who makeexempt supplies • in both cases, the value addedby the unregistered or exempt supplier is not taxed • The uncreditable input tax on acquisitions is passed on in the prices charged to consumers • Effective rate of tax depends on proportion of price that represents untaxed value added.

  11. How ABST works for consumers ABST operates like a retail sales tax on consumer purchases of goods and services in Antigua and Barbuda Consumers: • pay ABST on imports • are ‘charged’ 15% ABST when they buy goods or services from registered businesses • effectively pay partial ABST on purchases from unregistered businesses • prices will not go up by 15% because other taxes are being removed – services will go up more than goods; some prices will go down

  12. Who will be registered? • To be registered you must: • be a taxable person (includespartnerships, trusts, and unincorporated entities) • be carrying on a taxable activity (wider than business) • have an annual turnover ≥ the registration threshold • A person with more than one taxable activity will only need to be registered once: persons are registered, not activities. • Some things are not counted in measuring the threshold: exempt supplies, other non-taxable supplies, sales of capital assets, closure of a business… …

  13. Documentation requirements A registered person will be required to: • issue ABST invoices for taxable supplies to other registered persons • issue sales receipts showing ABST paid on taxable supplies to unregistered persons • advertise prices ABST-inclusive, stating how much ABST is included • display ABST registration certificate at places of business

  14. To reiterate: TAXABLE supplies: • ABST payable; input tax credits allowed ZERO-RATED taxable supplies: • no ABST payable; input tax credits allowed EXEMPT supplies: • no ABST payable; no input tax credits TRANSACTIONS are exempt; not persons

  15. To customs To IRD $9 $6 $30 $15 + + = $60 $9 $6 + $30 $15 Paper Advertising Material Paper Goods ABST Treatment:taxable supplies and imports $60- 45$15 $15- 9$6 $45- 15$30 Printer Retailer Consumer Importer Cost: $60 Value added: $40 Sell for:$100 plus ABST: $15 Taxed Price: $115 Cost: $100 Value added: $200 Sell for: $300plus ABST: $45 Taxed Price: $345 Cost: $300 Value added: $100 Sell for: $400plus ABST: $60Taxed Price: $460 Cost: $460(includes $60 tax)

  16. + + = $0 $9 $6 + $3 - $18 ABST: Supply to consumer is zero-ratede.g. electricity subject to the basic charge To customs To IRD $9 - $18 $6 $3 $ 0- 18-$18 $15- 9$6 $18- 15$3 Printer APUA Consumer Importer Printed Invoices Paper Paper Electricity Cost: $60 Value added: $40 Sell for:$100 plus ABST: $15 Taxed Price: $115 Cost: $100 Value added: $20 Sell for: $120plus ABST: $18 Taxed Price: $138 Cost: $120 Value added: $80 Sell for: $200plus ABST: $0Taxed Price: $200 Cost: $200(no tax)

  17. = $30 $30 ABST Treatment:Supplies zero-rated until retailer taxede.g. macaroni sold by a registered restaurant To IRD $30 $30- 0$30 300 Consumers Wholesaler Retailer Importer Macaroni Cheese Macaroni Macaroni Macaroni Cost: $60 Value added: $40 Sell for:$100 Cost: $100 Value added: $20 Sell for: $120 Cost: $120 Value added: $80 Sell for: $200plus ABST: $30Taxed Price: $230 Cost: $230(includes $30 tax)

  18. + = $18 $9 $6 + $3 ABST: Supply to consumer is exempt(e.g. financial services) To customs To IRD $9 $6 $3 $15- 9$6 $18- 15$3 Wholesaler Bank Consumer Importer Cost: $60 Value added: $40 Sell for:$100 plus ABST: $15 Taxed Price: $115 Cost: $100 Value added: $20 Sell for: $120plus ABST: $18 Taxed Price: $138 Cost: $138 Value added: $80 Sell for: $218plus ABST: $0Taxed Price: $218 Cost: $218(includes $18 tax)

  19. + + = $32 $9 $4 + $32 ABST: supply to retailer is exempte.g. financial services To IRD To customs $9 $6 $32 $32- 0$32 $15- 9$6 Bank Retailer Consumer Importer Cost: $60 Value added: $40 Sell for:$100 plus ABST: $15 Taxed Price: $115 Cost: $115 Value added: $20 Sell for: $135 Cost: $135 Value added: $80 Sell for: $215plus ABST: $32.25Taxed Price: $247.25 Cost: $247.25(includes $32.25 tax)

  20. = $9 $9 ABST Treatment:all suppliers are under the threshold To customs $9 Wholesaler Retailer Consumer Importer Cost: $60 Value added: $40 Tax: $9 Sell for:$109 Cost: $109 Value added: $20 Sell for: $129 Cost: $129 Value added: $80 Sell for: $229 Cost: $229(includes $9 tax)

  21. Time of supply • When do you account for ABST output & input tax? • If time of supply is in the current tax period • Time of supply is earlier of(a) when invoice issued(b) when all or part of the price is paid • Related parties – time of supply is earlier of above or time when goods are delivered or services are provided • Supplies that span periods (leases, licenses etc) – each part treated as a separate supply  therefore pay periodically and pay ABST periodically

  22. Place of supply • Goods: place where goods are when supplied • Services: most are where supplier has place of business; some are where supply effectively used or enjoyed • Special rules for rights to receive supplies (relevant to hotels)

  23. Zero-ratings for restaurants • basic foods are zero-rated, but restaurant food is not • ABST is more like a retail sales tax for restaurants because many inputs will not be taxed (therefore no input tax to claim back) • not entirely because rent of premises will be taxed, power & water will be taxed, equipment, cutlery & crockery etc all taxed therefore input tax credits for these

  24. Zero-ratings for hotels • as for restaurants, basic foods are zero-rated, but restaurant food is not • not likely to be any zero-ratings for hotels: the services and goods they provide are consumed here and are therefore taxable • this is the case even when they are sold via transactions with related or unrelated non-resident management companies and travel agents/tour operators

  25. Exempt c.f. taxable supplies • Sale and rent of residential property are exempt • Need for provisions to distinguish hotel or holiday accommodation from rent of private homes as principal residencee.g. need to distinguish condominium hotels from normal residential condominiums • Current draft adapted from existing rules – comments on those definitions welcomed • Regulations will deal with things like time shares (esp. where rented out by central manager)

  26. Sales to non-residents • Many supplies of goods or services to offshore recipients are zero-rated exports • This doesn’t apply to supplies of rights or options (including vouchers) if the goods and services will ultimately be consumed in Antigua and Barbuda • Differences between approaches around the world relate only to the VALUE on which VAT/GST/ABST is charged • all agree that there should be a local tax burden • question is whether value added by non-resident suppliers should be taxed locally

  27. Foreign Travel Agent Rights Rights Management Company Tourist (while overseas) Travels to A & B Overseas Antigua & Barbuda Tourist (in A&B) Rights Local Hotel Services & goods

  28. How are these rights taxed? • Not treated as an export even though supplied to a non-resident (because the end consumption is in Antigua and Barbuda) • Tax must be applied to the transactions • Some countries require the non-resident suppliers to register and pay tax on each transaction (ensures the full consumption price paid by the tourist is taxed) • More commonly, the non-residents are left out of the tax regime • If the parties are related, market valuation rules apply

  29. How are these rights taxed? • If the non-residents are not included, how much tax is collected? • One option is that the local hotel must pay ABST on the sale to the management company based on the value that will be charged to the tourist • Alternatively, this may only be required if all the suppliers are related parties: if the non-residents are unrelated entities, the local hotel can be taxed only on what it charges to the first overseas supplier • The foreign tour operator’s/travel agent’s margin is taxed where they are located.

  30. ABST draft approach • There is nothing currently specified • Current intention is to include provisions dealing with this in the regulations • Current leaning towards taxing on outgoing value except where overseas suppliers are related to local hotels • Not considered feasible to require non-residents to tax in order to try to capture the full value

  31. Structure of the Act • Basic provisions first – definitions then application of the law • Administrative provisions • Schedules (zero-ratings & exemptions) • Regulations – to cover transitional issues

  32. What do you need to do? • identify whether you will exceed the threshold • if yes: will your supplies be taxable, exempt, zero-rated, out-of-scope, or a combination • implement systems to ensure ABST is charged on the right kinds of supplies • work out how your prices should change: subtract taxes saved and then add ABST • get ready to print invoices and documents • be prepared for submitting ABST returns

  33. What do you need to do? • ensure there are appropriate links to your accounting systems to separate ABST from your income & costs • systems to capture input tax credit entitlements – to ensure you hold ABST invoices and to determine connection between inputs and any exempt or private outputs • will your customers be registered? • will your suppliers be registered? • are you record-keeping systems up to the task?

More Related