By Gary Hatigeva
PARLIAMENT has late yesterday, passed the Goods Tax (Amendment) Bill (Act) 2018 after members of both sides of the house agreed to adopt it and voted for its passage in its third reading.
The bill is enacted by the national parliament of Solomon Islands to amend the Good Tax Act in relation to the way the sale value of certain goods is calculated, and for other related purposes.
The amendment seeks to improve compliance to ensure those who are registered for the purpose of goods tax pay the same value as unregistered importers who are required to pay at the port.
The bill does this by setting an uplift value of 130% on goods imported by registered persons.
The Bill amends section 21(1) of the Goods Tax Act (Cap 122) by adding paragraph (c) so that even if a registered importer quotes their certificate at the port of entry, they will be liable for goods tax at the uplift values of 130 percent.
The commissioner of Inland Revenue according to the passed amendment Act will still be responsible for the collection of revenue from registered importers.
While supporting the bill, members of both the opposition and independent groups warned and reminded the government not to overlook key stakeholders in its consultation programmes on any changes made to what will have direct impacts to the private sector.
The government was also told that it is important works of the tax reform goes through before responsible stakeholders can start introducing other things, and was therefore cautioned that at the end of the day, one will also have low income earners that will bear the brunt of any increase or changes in taxation.
The BLC report further however pointed out that already, in an environment where Solomon Islands is a tough place to do business and also just for low incomes earners to survive, we might as we relook at this.
The government was further reminded that this taxation reform should be a holistic program that looks at three different stages.
After scrutinising the bill, the Bills and Legislation Committee (BLC) made strong recommendations for the government to consider, one which was that for any business entities who chose not to comply or evade the country’s taxation laws, be blacklisted, their names published, and they are barred from accessing government contracts and services
It was also suggested that the Ministry of Finance and Treasury carry out the overall reform of the taxation regime in the country to encourage compliance and avoid arbitrary taxation.
“Fairness dictates that the calculation of goods tax on goods must exclude customs duty on such goods,” the Committee states in its report.
The recommendations reiterated that important stakeholders in the economy must be consulted on any changes to any aspects of our taxation system, and for the government to ensure that in the final bill, the capital equipment imports that are not for resale are exempted from goods tax and the government to consider other tax options on such imports.
Meanwhile, the committee applauds the government’s efforts to enhance compliance with the country’s tax laws and ensure equitable treatment of importers.
The issue on tax evasion has been a government long time concern that some people who are registered for goods tax purposes are undervaluing goods at the wholesale level so to pay less or evade paying goods tax and the passage of this amended law will be embraced as the hope to stop it.
“It is hoped this bill (Act) will contribute to increase revenue to the government under goods tax.”