IMPROVING VAT/GST COMPLIANCE IN RELATION TO PROFESSIONAL SERVICES Presented by Alfred I Akibo-Betts Vada conference 2012 Arusha, tanzania

Presentation Details Introduction Quality of Law Pre-GST Introduction Initiatives Characteristics of Professional Services Sector Challenges of PSS to VAT Administration General VAT obligations of PSPs Legal Strategies Administrative Strategies Conclusion VAT Compliance for Professional Services 29/11/2012

Introduction Services versus goods Determining margins and turnover for services Success of Tax Administration for PS: Quality of Law Record Maintenance in the economy Professionalism and Competence in Tax Administration VAT Compliance for Professional Services 29/11/2012

Quality of Law GST ACT 2009 Scope for Professional Services Item 7 Second Schedule exempts Medical Services Item 10 Second Schedule exempts Pure Financial Intermediation Services All others included One Registration Threshold Reverse Charge on Imported Services VAT Compliance for Professional Services 29/11/2012

Pre-GST Introduction Initiatives Sector Specific Workshops One-on-One Education Reverse Charge Sensitisation VAT Compliance for Professional Services 29/11/2012

Characteristics of PS Sector Not tangible and don’t have stock Easily be imported, exported and rendered locally without notice E-commerce growing Record-keeping poor Provided mainly by individuals Mobile with no business location or physical assets No need for huge capital outlay No clear comparable market price VAT Compliance for Professional Services 29/11/2012

Challenges of PSS to VAT Administration Audit issues Difficulty in determining input in relation to output Turnover and Margins are difficult to determine Political influence Capturing imported services VAT Compliance for Professional Services 29/11/2012

General VAT Obligation of PSPs Issue the GST invoice/receipt on sales and retain copies Retain invoices on purchases Submit monthly returns Make payment of the tax due by the due date Maintain a monthly summary of records (GST Account) VAT Compliance for Professional Services 29/11/2012

Legal Initiatives Tax Avoidance Legislation e.g. WHVAT Introduce Tax Clearance Certificate for award of large contracts = post-qualification prerequisite Extra record to be kept by PSPs on client base of turnover Extra record to be kept by other taxpayers of PSPs contracted Separate return for imported services VAT Compliance for Professional Services 29/11/2012

Administrative Initiatives (1) Tax Authorities to thoroughly understand by laws/standards of professional bodies Engagement with professional bodies Improvement in tax capacity in the different PS sectors Apply integrated information management technique Intensify the use of the TIN for audit trail Big business doing business with VAT registered businesses VAT Compliance for Professional Services 29/11/2012

Administrative Initiatives (2) Improving tax capacity within the organisation for the different PS Sectors Third-party information during audits Intensify sensitisation through brochures Consultative Stakeholders’ Engagement Conference Sector-specific engagements Intensify monitoring on filing and payment VAT Compliance for Professional Services 29/11/2012

THANK YOU DISCUSSION TIME 29/11/2012 VAT Compliance for Professional Services 29/11/2012