Passing on hike to students inescapable in present form – TT audit firm

VAT on education

… says legislation can remove this burden

A Trinidadian audit firm, in collaboration with the Georgetown Chamber of Commerce and Industry (GCCI), hosted a seminar on Value Added Tax (VAT) on Tuesday where among the topics covered was VAT being placed on private education and the difficult position these schools have been placed in.
Speaking at the event were Tax Director of the Trinidad audit firm KPMG, Gillian Wolffe-O’Neil and the firm’s Tax Manager, Saskia Carmichael. According to the officials, who are both Attorneys-at-Law, the 14 per cent VAT, which private schools have to now pay will have to be passed on to students and parents.
They stated that the system was so designed to be activated once the school’s annual income exceeded $15 million. VAT, thus, is not supposed to be an additional cost to the business, once done correctly.
“There is no distinction for VAT purposes. Once you are making over the $15 million threshold, regardless of how much students your teaching, you will be subject to VAT,” Carmichael said.
“VAT is charged on the selling price, so this is recovered from the consumer,” Wolffe-O’Neil added. “So now it is going to be more expensive in the hands of the consumer.”
In an interview afterwards, Wolffe-O’Neil was asked about best practises and whether there was any model in Trinidad and Tobago for similar tax measures. As it turns out, her country is completely free of any such measures.

“We have legislation that basically says all education services and tuition, they’re exempt from VAT. So I understand your situation, your private schools charge VAT, but (in Trinidad) private and public fall under what you call the Education Act and they’re all exempt.”
She also spoke about categorising the VAT as a tax deductible in order to not have to pass on the expense to consumers. According to the Tax Director, who is a member of the local and Trinidadian bars, at the end of the day, the consumer would bear the cost.
“If, in fact that institution that you’re talking about is a private institution and must charge VAT, it will pass on the VAT to the consumers. The consumers will bear the cost. But the institution itself will be able to claim back all input VAT on its expenditure.”
Meanwhile, GCCI President Deodat Indar, in his opening remarks at the occasion, said the business community had taken stock of the various tax measures when they were first announced in the 2017 Budget.
He stated that while taxation has historically been used either to build up industries or stymie them, the VAT measures have serious ramifications for the various sectors in Guyana.

Defence
During an interview with the press last month, Finance Minister Winston Jordan had defended the tax measure. He had suggested that with regard to poorer students, the school and parents could work out some cost-sharing mechanism.
He was reported in the media as saying that the institution could later represent this to the Guyana Revenue Authority (GRA) as an expense that would be deducted against VATable income.
“Go the route of absorbing the VAT. They will just write it down as a tax deductible (and) it will become an expense, so it just reduces income that GRA can tax, it is a win-win for everybody.”
Minister Jordan had also suggested that these schools could follow the models of other institutions with regard to VAT. He had identified GTT and the Cheddi Jagan International Airport (CJIA) as examples of places which absorbed the VAT.

Protest
The issue of VAT on education has been a thorny one, prompting street protests outside the GRA and the Finance Ministry against the measure since it was implemented.
Government had said that VAT would be reviewed for the 2018 National Budget, for which preparations would commence in June.
Following that announcement by Prime Minister Moses Nagamootoo, distraught and disappointed stakeholders stormed out of a recent consultation.
The concerned stakeholders are not satisfied with Government’s decision and have pledged their commitment to continue to oppose the education tax.
In fact, a protest is scheduled for today outside the Ministry of the Presidency.