#Providenciales, March 12, 2019 – TCI –While I appreciate the fact that the National Health and National Insurance are governed by separate Boards, the penalty for late payment should be consistent between these boards. The penalties for these Boards should also be the same as the Ministry of Finance which oversees the Business licence fees and Accommodation taxes. To be fair, I believe at one point, all bodies were charging the same 10% but somehow the rates change.
National Health Penalty
The
penalty for the late payment of National Health Insurance is now 3% per month. This
was change in 2014 after the amnesty period. Therefore, the first month will be
3%, the second month will be 6% and the third month will be 9% etc.
National Insurance Penalty
The
penalty for the late payment of National Insurance change in 2011 after NIB
offered the first and only amnesty. The
penalty is now 10% for the first month and then an additional 3% for each month
outstanding. Therefore the second month penalty will be 13%, the third month
penalty will be 16% etc.
Business Licence Penalty
The
penalty for the late payment of Business licence is 10% per month. Business
licences are to be renewed by April 1st and if you renewed after
April 30th, it will be 10% per month. If a business discontinues to
operate, they must inform the Business Licence team otherwise, they will
continue to charge the 10%. The first month will be 10%, the second month will
be 20% and the third month 30%.
Accommodation Tax Penalty Rate
The
penalty rate under the previous Hotel and tourism taxation ordinance was 10%
per month for every month you were outstanding. Therefore, if you were outstanding
for a year, the penalty would have been 120% and if you were outstanding for two
years, the penalty rate would have been 240%
Based on
section 28 of the new Hotel, restaurant and tourism taxation 2019 that the
penalty rate has been changed to 20% and then an additional 1.5% for each month
the taxes are unpaid. I think this new proposed rates are much better than what
we currently have so I want to thank the Government for reviewing and implementing
this change.
For
example, if a company has $20,000 in unpaid taxes for 24 months, the penalty
under the previous law would have been $48,000 plus the $20,000 unpaid taxes
resulting in a total outstanding amount to Government for $68,000. Under this
proposed law, the company penalty would be $11,200 plus the unpaid taxes of $20,000
resulting in a total outstanding amount of $31,200. This company would save
$36,800
Financial Services Commission (FSC) penalty.
The FSC
charges a penalty of a flat fee of $350 for every year a company does not pay
their annual returns. If the company does not pay the annual return, the
company is not consider to be in good standing.
Fortis
Fortis
TCI is a private company and their penalty Rate is 2% per month is charged on
all unpaid rates. Fortis also disconnects you if you do not pay by the required
deadline. You have to pay the full amount to be reconnected.
Provo Water Company
Provo
Water Company is also a private company and the penalty is 2% per month just
like Fortis. PWC also disconnects you if you do not pay by the required
deadline. You have to pay the full amount to be reconnected plus a flat
reconnection.
FLOw and Digicel
Flow and
Digicel do not charge a penalty. However, you will be disconnected if you do
not pay your bill by the required time.
Recommendations
- A flat fee for late payment
should be levy on business rather than the high% rate.
- At the end of each month, when
payments are due, TCIG should run a report on who did not pay and let them
desist from operating until they pay the taxes. If not, the taxes and penalties
will continue to grow. Both TCIG and the customer will benefit from this.
- The recent amnesty waiver will
not resolve future issue if customers do not have the discipline to pay the
taxes on time.
- Business Licence should not be
renewed if taxes are outstanding.
- Perhaps the payment dates for all
taxes should be the same.
Conclusion
In addition to the above, I encourage everyone to familiarize themselves with the laws in their industry especially the accommodation taxation laws. Basically all services that are provided to guests during their stay at any accommodation are taxable. However, many of us do not know that and when the audit department inspects your books, you will be liable to pay the taxes and will incur not just the tax liability but also the penalties associated with it. It is interesting to note that the private sector penalties are lower than that of the Public sector. It appears that most people pay their taxes on time and so now is the time to have a flat rate across all the Public Sector Bodies.
By Drexwell Seymour