That magic date of September 1- Challenges and opportunities for the business community.

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That magic date of September 1- Challenges and opportunities for the business community. By: Cuthbert John, PMP.

The Government of St. Lucia has decided that the VAT will become the law of the land on September 1 2012. As was the case in other islands, it is expected to replace some existing taxes and herald a new age of tax reform. Some in the business community may be concerned about their ability to be VAT ready by that date. Many would be calling on the Government to change the date from September 1 to several months into the future. As was the case in other OECS territories, business organizations would spend weeks worrying about the many challenges which seem insurmountable, given such a small window for the VAT implementation. Radio talk show hosts will have a field day talking about how bad VAT will be for the country and why September 1 is like Armageddon. There would be concerns about the VAT rate; the basket of goods that should be zero rated or VAT exempt; the issue of how to treat existing inventory; the question of existing information systems and their ability to handle the VAT; the issues of existing concessions and the appropriate treatment under a VAT regime; the specific interest of the key economic sectors and how they will be impacted by the VAT; the effect on the cost of living as a result of the implementation of VAT and the many issues of compliance, audits and penalties.

These are legitimate concerns and challenges which must to dealt with before September 1, but as was also the case in other OECS islands where VAT was implemented, what most businesses and consumers WILL NOT DO, is to focus on the many opportunities which the short window for implementation of VAT offers. Here are just a few opportunities to consider:

  • For those with inadequate accounting and financial systems, the opportunity to once and for all get a handle of what is happening in their businesses, by introducing or improving management information systems capable of dealing with the VAT, but more than anything else, systems which afford business owners and managers, the opportunity to get timely information from their financial systems for better decision making and management.
  • For those with stock on hand, the opportunity to use creative sales and marketing techniques to move merchandize which may have been sitting on the shelves or in store rooms for weeks, months and sometimes years. This single act, if done on a national scale, can breed some life into a generally slow economy and hopefully, give some impetus to economic growth.
  • For those with an entrepreneurial mind, the opportunity to analyze the market, do the math and seize the moment by importing new products, in a timely manner, to coincide with the September 1 deadline. It is an opportunity to bring competition to some parts of the market place and to provide consumers with lower prices and more variety.
  • For most businesses, the opportunity to get additional cash flows and to manage or use these cash flows to the advantage of their businesses. Of course the cash flows must also be available to pay the VAT on the date it is due.
  • For the business organizations which have operated in isolation and with little or no collaboration in the past, to form a united front to lobby the government on implementing aspects of the VAT which will benefit their members and the country as a whole.

If history is to be our guide, it is safe to assume that the VAT will be implemented, come September 1 and with only four months to go, businesses and organizations may want to begin to prepare for that magic date. Yes, there are many challenges to be faced with the implementation by September 1, but one must also remember that this talk about VAT being implemented in St. Lucia has been around for a few years and with an economy which is not doing so well and international lenders who are insisting on tax reform as a condition for receiving assistance which may get the country out of the recession, there is more to gain by embracing the opportunities which September 1 can bring, rather than to focus mainly on the challenges ahead.

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