Tax Department investigates large businesses [1]
Sunday, October 7, 2007 - 12:07. Updated on Tuesday, July 21, 2015 - 15:18.
The Minister for Finance and Chief Commissioner of Revenue, Hon Siosiua T.T. 'Utoikamanu, has instructed Revenue Services to investigate all allegations made by large businesses about the impact of Consumption Tax on prices.
"Some prominent businesses have gone to the media claiming that Consumption Tax (CT) is behind the price increases over the last few months," said the Minister.
"I am concerned with these allegations because it contradicts how CT works and how it should be treated by large businesses. CT registered businesses can claim back their CT payments or use it to offset their CT obligations so it should not have a major impact on their pricing. We also need to remember that the 15% CT has replaced the old Ports and Services Tax (20%) and Sales Tax (5%) previously charged on top of customs duties.
"Therefore, I have instructed the Revenue Services Large Business Division, to visit the CT registered businesses and especially those who have raised such concerns and to check all their costings and charges to ensure they are compliant with our CT tax laws.
"The majority of the CT registered businesses have proper systems in place and understand the treatment of CT but I suspect that a few may not be following the proper process and therefore calculating their CT payments incorrectly.
"Our analysis and regular surveys found that CT has reduced prices since its inception on 1 April 2005 so any business that says otherwise needs to be looked at closely. The price of basic goods actually fell when CT was introduced.
"My concern is that the public are receiving messages about CT that are incorrect so I have mobilized Revenue Services to get alongside the concerned businesses to check their figures. I suspect that some are having efficiency problems and raising their margins but are hiding behind allegations that CT is the cause of the price increase.
"Whatever the reasons may be - I want to get to the bottom of it so that we can provide assistance if required or take appropriate action if businesses are non-compliant," concluded the Minister. Ministry of Finance, 02/10/07.