GENERAL SALES TAX

1. GENERAL SALES TAX

2. WHAT IS GST? 1. Is a Broad-Based, Multi-Stage Tax on Value Added Broad–based: charged on a wide range of goods and services Multi-stage: charged at every level of the economic chain Value added: is a tax on the mark up on goods and services supplied by one business to another or to the final consumer

3. WHAT IS GST (cont) • A transaction tax on supplies • Charged on each and every transaction involving the supply of goods or services, including business to business and business to consumer transactions • A consumption tax • Passed on to consumers in price of each consumer transaction

4. MAIN FEATURES OF THE GST • RATES - STANDARD RATE IS 10% • - ZERO RATE (0%) • THRESHOLD $75,000.00 PER ANNUM • PRICES CHARGED TO BE GST INCLUSIVE • THERE ARE A NUMBER OF ITEMS THAT ARE EXEMPT AND ZERO RATED

5. TAXABLE SUPPLIES • THESE ARE THE GOODS AND SERVICES THAT ARE SUBJECT TO THE GST • ITEMS THAT ARE ZERO-RATED ARE INCLUDED • EXEMPT ITEMS ARE NOT INCLUDED • LEGISLATION PROVIDES RULES ON TIME OF SUPPLY, CONSIDERATION FOR SUPPLY ETC. • PERSON MAKING SUPPLY OR IMPORT IS TO ACCOUNT FOR TAX PAYABLE ON TAXABLE SUPPLY

6. ZERO-RATED SUPPLIES • THESE ARE THE GOODS AND SERVICES THAT ARE SUBJECT TO THE GST, BUT AT THE RATE OF ZERO PER CENT • REGISTERED PERSONS CAN CLAIM A CREDIT FOR TAX PAID/PAYABLE ON INPUTS • EXAMPLES OF ZERO-RATED SUPPLIES ARE:- • GOODS AND SERVICES FOR EXPORT • BASIC FOODS:- RICE, SUGAR, MILK AND FLOUR

7. EXEMPT SUPPLIES • THESE ARE THE GOODS AND SERVICES THAT ARE NOT DIRECTLY SUBJECT TO THE GST • NO GST WILL BE CHARGED ON SALES MADE OF THESE SUPPLIES • NO CLAIM OF CREDITS ON INPUTS IS ALLOWED • EXAMPLES OF EXEMPT SUPPLIES ARE:- • FINANCIAL SERVICES (EG. BANKING, INSURANCE) • RESIDENTIAL RENTS • WATER SUPPLIED – BELIZE WATER SERVICES • EDUCATION

8. MECHANICS OF GST • GST IS NOT A TAX ON BUSINESSES- registered businesses can claim back GST on their inputs. • INPUT TAX – IS TAX PAID ON BUSINESS PURCHASES; input tax on capital purchases is deductible at the time of acquisition. • OUTPUT TAX – IS CHARGED BY REGISTERED PERSONS ON SALES TO CONSUMERS

9. GST APPLIED TO PRICE OF A PRODUCT SOLD BY A REGISTERED TAXPAYER • GST RATE = 10% • CIF VALUE 2000.00 • IMPORT DUTY @ 20% OF CIF 400.00 • 2400.00 • ENVIRONMENTAL TAX @ 2% OF CIF 40.00 • PURCHASE PRICE 2440.00 • INPUT GST (10% OF PURCHASE PRICE) 244.00 • ADD MARK-UP OF 35% OF PURCHASE PRICE854.00 • SELLING PRICE 3294.00 • OUTPUT GST (10% OF 3294.00) 329.40 • FINAL SELLING PRICE 3623.40

10. REGISTRATION • TAXPAYERS ARE REQUIRED TO BE REGISTERED TO CHARGE THE TAX • THRESHOLD IS $75,000 ANNUAL TAXABLE SUPPLIES • TAXPAYERS ARE TO APPLY FOR REGISTRATION • CERTIFICATE WILL BE ISSUED AND IS TO BE PROMINENTLY DISPLAYED AT PLACE OF BUSINESS

11. ACCOUNTING AND RECORDS • PROPER RECORDS IS A STRICT REQUIREMENT OF THE LEGISLATION • RECORDS INCLUDE: • SALES INVOICES/SERVICE BILLING INVOICES • PURCHASE AND SALES BOOKS • PURCHASE/IMPORT DOCUMENTATION • PURCHASE INVOICES • CREDIT OR DEBIT NOTES

12. Sample TAX INVOICE FROM: ABC Furniture Company Invoice No:00123 ADDRESS: #2 Mayflower Street TIN No:735211 Date: July 12, 2006 TO: XYZ Company TIN No:772233 ADDRESS: #3 Eve Street QUANTITY DESCRIPTION AMT. EXCLUDINGGST 30 Chairs @ $15.00 ea. $450.00 GST 10% $45.00 Total:- $495.00

13. ANGEL CARPENTRY INDUSTRY-GST ACCOUNT, APRIL 2006 Pays to Government: $10 ($60-$50) If Input Tax is greater than Output Tax a refund is due

14. RETURNS, PAYMENTS & ASSESSMENTS • REGISTERED PERSONS WILL BE REQUIRED TO FILE MONTHLY GST RETURNS • DEADLINE 15TH OF MONTH FOLLOWING END OF TAX PERIOD – WHETHER OR NOT TAX IS PAYABLE • RETURNS TO BE FILED WITH GST DEPARTMENT • PAYMENT OF TAX DUE SHOULD ACCOMPANY RETURN • TAX DUE IS THE DIFFERENCE BETWEEN OUTPUT TAX AND INPUT TAX

15. CREDIT/REFUNDS • WILL OCCUR IF INPUT TAX PAID EXCEEDS OUTPUT TAX COLLECTED • CREDIT WILL BE CARRIED FORWARD AS INPUT TAX FOR NEXT TAX PERIODS • IF CREDIT EXISTS FOR MORE THAN 3 TAX PERIODS, CLAIM MAY BE FILED FOR REFUND OF REMAINING AMOUNT • INTEREST WILL BE PAYABLE ON REFUNDS UNPAID 3 MONTHS AFTER CLAIM IS FILED

16. PENALTIES • THE LAW MAKES PROVISION FOR PENALTIES . SOME OF THESE ARE:- • FAILURE TO REGISTER • ISSUANCE OF FALSE INVOICES • FAILURE TO PAY • FAILURE TO FILE • FAILURE TO KEEP PROPER RECORDS • NON-COMPLIANCE WITH PRICE QUOTATION REQUIREMENTS

17. OBJECTIONS AND APPEALS • PROVISION IS MADE IN THE LAW FOR PERSONS TO MAKE OBJECTIONS • OBJECTIONS MUST BE IN WRITING AND STATE PRECISE GROUNDS • IF NOT SATISIFIED WITH COMMISSIONER’S DECISION, PERSONS CAN APPEAL TO THE APPEALS BOARD • IF NOT SATISIFIED WITH DECISION OF THE APPEAL BOARD, PERSONS CAN TAKE THE MATTER TO THE SUPREME COURT • THE BURDEN OF PROOF LIES WITH THE PERSON OBJECTING OR APPEALING

18. KEY POINTS • G.S.T. IS A TAX ON CONSUMER SPENDING; • INPUT TAX IS PAID AT THE POINT OF IMPORT (THROUGH CUSTOMS) AND PURCHASE FROM A REGISTERED TAXPAYER; • INPUT TAX CAN ONLY BE CLAIMED BY A REGISTERED TAXPAYER • THE INPUT GST PAID BY A REGISTERED TAXPAYER IS NOT TO BE ADDED TO THE PRICE OF THE ITEM; • FLOUR, MILK, RICE & SUGAR ARE ZERO-RATED;

19. ANY INPUT TAX THAT CANNOT BE CLAIMED BACK WILL BE PASSED ON TO CONSUMERS • WATER (EXCEPT BOTTLED WATER) OR DOMESTIC SEWERAGE SERVICES, • FINANCIAL SERVICES ARE EXEMPT

20. THANKS FOR YOUR ATTENTION GST Unit email: GST.unit@stx.gov.bz Our Phone number is: 222-5553, Fax # 222-5513 To access a copy of the GST Act: www.gst.gov.bz