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

2. 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

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

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