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Old 16-10-2002, 09:28 AM
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Vat Update 15th October, 2002

Advice received this afternoon from IRC has confirmed the following update on the situation regarding the imposition of VAT:

The stay order will remain in force until 1 July 2003. This means the VAT Act will continue to operate as it did prior to the Supreme Court decision handed down on 27 September 2002. All persons or companies registered for VAT or liable to be registered will continue to lodge VAT returns on a monthly basis and make payments of VAT due to Internal Revenue Commission (IRC) by the 21st day of the following month as was the case prior to the ruling.

During the stay period the IRC will continue to make refunds of overpayments of VAT and will offset VAT credits against other taxes and charges administered by IRC.

Whilst the stay is in force, legislation will be passed that will ensure the successful operation of a goods and services tax within the legal requirements of the Organic Law and the Constitution.

It is proposed to phase out The VAT Act and the VAT Distribution Act with effect from 31 December 2003, to be replaced on 1 January 2004 by a new tax to be known as the National Goods and Services Tax. Apart from the name the new tax will not be substantially different from the present VAT Act.

Under the new arrangement, the provinces are understood to have been promised a greater share of the net revenue collected and a new body to be known as the National Economic Fiscal Commission will be established to review the sharing arrangement on an on going basis.

With the uncertainty regarding VAT removed, businesses can now concentrate on getting back to doing what they did prior to 27 September 2002.

If you have any queries regarding this matter or if you require any additional information please contact Brydon Davidson, Arun Basu or myself at this office.

Partner Taxation Services
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