Bill 22 2024 - Value Added Tax (Amendment) Bill 2024

[27th November 202 4 ] V alue Added Tax (Amendment) 1 RREEPPUUBBLLIICC OOFF SSEEYYCCHHEELLLLEESS SSUUPPPPLLEEMMEENNTT TTOO OOFFFFIICCIIAALL GGAAZZEETTTTEE BBIILLLL VALUE ADDED TAX (AMENDMENT) BILL, 2024 (Bill No. 22 of 2024) EXPLANATORY STATEMENT OF THE OBJECTS AND REASONS FOR THE BILL The object of this Bill is to amend the Value Added Tax Act, 2012, Cap 244, in order to reform the Act in line with the International Monetary Fund recommendations in order to streamline and enhance VAT compliance with a focus on curtailing specific abusive practices. Dated this 26th day of November, 2024. NAADIR HASSAN MINISTER OF FINANCE, NATIONAL PLANNING AND TRADE ——————— [27th November 202 4 ] V alue Added Tax (Amendment) 2 RREEPPUUBBLLIICC OOFF SSEEYYCCHHEELLLLEESS SSUUPPPPLLEEMMEENNTT TTOO OOFFFFIICCIIAALL GGAAZZEETTTTEE BBIILLLL VALUE ADDED TAX (AMENDMENT) BILL, 2024 (Bill No. 22 of 2024) A BILL FOR AN ACT TO AMEND VALUE ADDED TAX ACT (CAP 244). ENACTED by the President and the National Assembly. Short title 1. This Act may be cited as the Value Added Tax (Amendment) Act, 2024 and shall come into operation on the 1st January, 2025. [27th November 202 4 ] V alue Added Tax (Amendment) 3 RREEPPUUBBLLIICC OOFF SSEEYYCCHHEELLLLEESS SSUUPPPPLLEEMMEENNTT TTOO OOFFFFIICCIIAALL GGAAZZEETTTTEE BBIILLLL Amendment of section 3 2. Section 3 of the Value Added Tax Act in this Act referred to as the principal Act is amended — (a) by repealing the word “and” at the end of paragraph (a) and replacing it with “or”. (b) in paragraph (b), repealing the words “levies,” after the word “duties” and by inserting after the words “service charges” the words “and levies”. Amendment of section 7 3. Section 7 of the principal Act is amended by repealing the word “Fifth” in subsection (2) and substituting the word “Fourth”. Amendment of section 8 4. Section 8 of the principal Act is amended by inserting after subsection (6) the following — “(7) Notwithstanding this section, the Commissioner General may defer the registration of any person based on the following grounds — (a) the person has no bank account; (b) the person has previously been registered for VAT and has not been compliant to their obligations under this Act; or (c) the person has record of tax related abuse or fraud.”. Amendment of section 9 5. Section 9 of the principal Act is amended — (a) by repealing subsection 2 (a), and substituting with the following new paragraph — [27th November 202 4 ] V alue Added Tax (Amendment) 4 RREEPPUUBBLLIICC OOFF SSEEYYCCHHEELLLLEESS SSUUPPPPLLEEMMEENNTT TTOO OOFFFFIICCIIAALL GGAAZZEETTTTEE BBIILLLL “(a) where the value of taxable supplies is equal to or greater than the amount specified in the Fourth Schedule, the person has — (i) at the beginning of the 6 month period, if there are reasonable grounds to expect that the person will exceed the voluntary registration threshold in that period; or (ii) at the end of any 12 month or lesser period, if in that period the person exceeds the voluntary registration threshold;”; (b) by inserting, after subsection (2), the following new subsections — “(2A) A person exceeds the voluntary registration threshold in a particular period if the total value of taxable supplies made or reasonably expected to be made by the person during the period is equal to or greater than the amount specified in the Fourth Schedule. (2B) Notwithstanding subsection (1), the Revenue Commissioner may refuse the registration of any person, if — (a) the person has not met the threshold or criteria specified under section 9 (1) to (2)(d) of the Act; or (b) the person has no bank account; or (c) the person has previously been registered for VAT on a voluntary basis but has failed to fulfil the conditions stated under the VAT Act; or (d) the Revenue Commissioner has concerns for potential abuse or fraud pursuant to section 8(7)(c).” [27th November 202 4 ] V alue Added Tax (Amendment) 5 RREEPPUUBBLLIICC OOFF SSEEYYCCHHEELLLLEESS SSUUPPPPLLEEMMEENNTT TTOO OOFFFFIICCIIAALL GGAAZZEETTTTEE BBIILLLL Amendment of section 12 6. Section 12 of the principal Act is amended — (a) in subsection (4), by repealing the word “twelve” wherever it may appear and substituting with the word “twenty-four”.; (b) in subsection (4) (b), by repealing the words “or less”; (c) by inserting after subsection (4) (b) the following subsection — “(4A) Notwithstanding subsections (3) and (4), the Revenue Commissioner may refuse to cancel the registration of any person registered under section 9 where the Revenue Commissioner considers it necessary for the protection of the revenue.”; (d) by deleting the full stop after subparagraph 5(c) and inserting the following new subparagraph — “(d) the person no longer meets any of the criteria listed in Part III (REGISTRATION) of the Act.”; Amendment of section 13 7. Section 13 of the principal Act is amended — (a) by substituting the “.” after the word “goods” in subparagraph (1)(b) with “, or” (b) by inserting after subparagraph (1)(b) the following — “(c) for the acquisition of services.” ; (c) in subsection (2), by substituting the “(a) or (b)” after the word “paragraphs” with “(a), (b) or (c)”. [27th November 202 4 ] V alue Added Tax (Amendment) 6 RREEPPUUBBLLIICC OOFF SSEEYYCCHHEELLLLEESS SSUUPPPPLLEEMMEENNTT TTOO OOFFFFIICCIIAALL GGAAZZEETTTTEE BBIILLLL Amendment of section 23 8. Section 23 of the principal Act is amended by repealing subsection (c) and substituting with the following — “(c) the amount of any customs duty, excise, or any fee or other charge paid (excluding levies) in respect of the import.” Amendment of section 24 9. Section 24 of the principal Act is amended — (a) by inserting after subsection 7 the following — “8.(1) Notwithstanding subsection (7), a taxable person shall be required to complete a VAT input tax credit form when the input tax credit amount is equal to or greater than SCR50,000 per transaction. (2) The VAT input tax credit form shall be furnished upon submission of the VAT returns.”.