The return of VAT follows a national public relations campaign which included 150 meetings and 820 advisory visits to businesses. *Photo credit: tradeget.com

ST GEORGE’S, Grenada, CMC – A 15 per cent value-added tax (VAT), a broad consumption tax on goods and services was re-introduced here Monday, with a promise that it would be spared on a fresh range of popular products, Finance Minister Nazim Burke said.

Bread, medicines for chronic diseases, pipe borne water, unprocessed agricultural products and energy saving devices, were among the items absent from the VAT law that was passed seven months ago and not zero-rated officially, owing to a “glitch”, Burke said.

He promised that they would be included in a new basket of goods that would be VAT-free in an adjustment to the law “in due course”.

“This is just a legal, technical glitch. We would have amended the law ahead of February 1st but the law having being passed, we can’t amend it before it takes effect. We will make all of the administrative changes. We would not require anyone to pay VAT or collect VAT on these items”.

The additional list of zero-rated items was picked following talks with local businesses, the finance minister said.

The new list also includes fish, poultry and meat. The goods already VAT-free are flour, sugar, rice and milk as well as motor spirits and electricity usage up to 99 kilowatt-hours per month.

VAT replaces general consumption, motor vehicle and airport taxes here.

First introduced in 1986, about 36 amendments were made to spare a range of items, which are believed to have led to its repeal in 1995.

“We don’t want to be amending the law everyday because that itself undermines confidence in the system,” Burke said.

“As we go into the VAT we will gather as many glitches as we can find. Then we will collect all of these changes and then at a certain point – three, four or six months from now, we will then make those changes in one block so we are not changing the law everyday,” the finance minister added.

Grenadian businesses with sales of EC$120,000 or more a year (one EC dollar = 37 US cents) are required to register to charge VAT.

First introduced among CARICOM states in Trinidad and Tobago in 1990, VAT is a form of indirect taxation which often replaces a raft of consumption taxes, duties and levies on goods, and is imposed on services and some transactions.

VAT has been in force in Barbados since 1997, in Dominica in 2006 and in Guyana and St Vincent and the Grenadines from 2007. St Lucia is preparing to introduce VAT in April. About 130 countries worldwide use the tax.

The return of VAT follows a national public relations campaign which included 150 meetings and 820 advisory visits to businesses.

The deadline for firms and service providers to join the 720 businesses already registered to charge VAT has been extended to February 15.