National Awareness on the Tax Administration Act. Date: Friday 15 th - PowerPoint PPT Presentation

National Awareness on the Tax Administration Act. Date: Friday 15 th of November 2019 Location: NATIONAL CONVENTION CENTER 1 PORT VILA Tax Administration Act - Public Information Presentation

Presentation Outline 2 Today’s session details 1. Background 2. Overview of the Tax Administration Act (TAA) a. Structure and general contents b. Details of some key areas of the new law 3. Upcoming amendments and reforms 4. Ongoing Consultation details Tax Administration Act - Public Information Presentation

Brochure/Pamphlets 3  You should have with you 7 different Brochures / Pamphlets Tax Administration Act - Public Information Presentation

Policy Overview of the TAX ADMINISTRATION ACT This Section is summarized into two Brochures/ Pamphlets we have, which are titled: • What is Tax Administration Act • Meeting Our International Obligations 4 Tax Administration Act - Public Information Presentation

Details of the TAA 5  The Tax Administration Act No.37 of 2018 (the TAA or Tax Administration Act) was gazette on 24 June 2019.  The TAA comes fully into force on 1 January 2020 – however;  Record Keeping; and  Tax Identification Number rules commence immediately.  You can access the TAA online at: https://doft.gov.vu/index.php/widgetkit/tax-policy-and-exchange- information  Official Contacts are located in the Brochures / Pamphlets Tax Administration Act - Public Information Presentation

What is the Tax Administration Act? 6  Tax administration Act (TAA) - provides for harmonized procedural rules that apply to our tax laws.  Modernisation -The TAA supports the Government’s initiative to help modernise the Department of Customs and Inland Revenue and improve taxpayer compliance.  Rights and Obligations - The TAA outlines the fundamental rights and obligations of taxpayers and provides the Department of Customs and Inland Revenue with expansive powers to collect information and impose penalties.  Greater flexibility - More discretion for the Director of Customs and Inland Revenue, greater use of regulations, wider powers of information collection and sharing. Tax Administration Act - Public Information Presentation

What is the Tax Administration Act? (cont.) 7  The TAA is important for the government – will help to strengthen its effort in the collections and administration of taxes.  The TAA is expected to apply to all taxes administered by DCIR as well as any new tax laws that DCIR may administer in the future. Tax Administration Act - Public Information Presentation

The Tax Administration ACT is not Income 8 Tax.  Its Important to note that the TAA is NOT Income Tax.  The TAA deals with the ADMINISTRATION of our tax and revenue laws.  Most provisions within the Tax Administration Act is not new because they already exist in most of the current legislations administered by DCIR such as those within the VAT Act, Business Licenses Act, Import Duty and Excise tax Act, Customs Act, the Rent tax Act and a few more. What we aim to achieve in the TAA is to ensure these rules are effectively implemented in a way that benefits both the Government and Tax payers. Tax Administration Act - Public Information Presentation

Current policy Issues of concern. 9 General Feedback  Government not doing enough to collect the expected revenue that is due to the state.  Lack of Commitment from Tax payers to pay their tax when due.  There are evidences of tax avoidance and lack of commitment from various taxpayers.  There are instances where rules are not applied correctly or consistently.  No Revenue Tribunal – difficult to dispute issues. Tax Administration Act - Public Information Presentation

Strengthen - Partnership 10 Improving the way taxes are administrated can also give confidence in the government and allows the government to strengthen its partnership with its core stakeholders such as the business community and NGOs etc. Tax Administration Act - Public Information Presentation

Meeting our International Obligations 11 Vanuatu Commitments to the international organisations such as the OECD Global Forum, the European Union Code of Conduct Group, AML CTF and others calls for more efficient Tax Administration. Please Refer to Brochure titles Meeting our International Obligations Tax Administration Act - Public Information Presentation

The Benefits of the Tax Administration Act 12 Key Benefits  Better Tax Administration (modern and effective rules)  Better Governance and Reporting by DCIR  Consistent rules across many taxes (rulings and the Tribunal)  Streamlined administrative and criminal penalties  Better taxpayer service (will facilitate electronic lodgement and payment etc. Tax Administration Act - Public Information Presentation

Quick Overview of the Tax Administration Act. • This The Next Load of presentation Aim to give a deeper perspective into the TAA. 13 • Please refer to the Handouts to follow discussion on the specific sections of the TAA. Tax Administration Act - Public Information Presentation

Sample of the TAA Structure and Content 14 Tax Administration Act - Public Information Presentation

WR2 Tax Administration Act IN DETAIL 15 Tax Administration Act - Public Information Presentation

Slide 15 WR2 Willie Rex, 27/09/2019

Note: 16  Remaining 5 Brochures will be feature in this remaining discussions.  Tax Identification Numbers (TIN)  Keeping Business Records in Vanuatu  Revenue Tribunal  Tax Agents  Penalties and Enforcements Tax Administration Act - Public Information Presentation

PART 2 Division 1 & 2 – 17 Taxpayer Identification Numbers (“TIN”)  The TAA provides for the issue to, and use by, taxpayers of a taxpayer identification number (“TIN”).  A TIN is a single identifier that can be used for the purposes of all taxes. In broad terms, the issuing of a TIN is the general basis for taxpayer registration. TINs provide the opportunity for a “one-stop-shop” approach to taxpayer registration, thereby reducing compliance costs and over time  It can be used as an identifier for other Government purposes. The TAA provides the legal framework for this. Tax Administration Act - Public Information Presentation

Taxpayer Identification Numbers (“TIN”) – 18 Part 2 (Cont.)  Regulations for the issue and use of TINs are in the final stages of development and will be available to for public consultation in the near future.  The current CT number may be used as the new TIN. Alternatively, a new number, which may include imbedded check numbers to reduce possible transcription errors, may be used. DCIR will be consulting on this in the near future. Tax Administration Act - Public Information Presentation

Record Keeping requirements – Part 3 19  Section 8 provides for the general rules in relation to records required to be kept by all individuals and entities carrying on business with real economic activity in Vanuatu.  This is necessary to ensure that Vanuatu has consistent record keeping and retention rules that apply generally and meet OECD Global Forum standards. These rules will apply to all entities including international companies and similar.  DCIR will help businesses ensure they keep records properly. Compliance  Businesses must keep records. Businesses that do not keep their records properly will be liable to penalties. They will actively work together with key stakeholders to ensure they keep records. Tax Administration Act - Public Information Presentation

What are the Minimum Records to keep? 20 All businesses and investors must keep records that correctly explain all transactions you enter as a business or investor. The records must:  enable the financial position of the person to be determined with reasonable accuracy at any time; and  allow financial statements to be prepared; and  be maintained in a manner so as to enable the person’s tax liability under the tax law to be readily ascertained. Tax Administration Act - Public Information Presentation

What are the Minimum Records to keep? (Cont.) 21  Records include all source and underlying documents relating to transactions entered into by the person, including, invoices, purchase orders, delivery dockets, receipts, contracts, and Customs documentation.  Records can be kept overseas, but must be provided if required by the Director. This covers online records etc.  Records must be retained for 5 years (or such other time as may be prescribed) after the end of tax period to which they relate. This is longer if you are disputing a tax return or have an appeal in progress etc.  If an entity ceases to exist (e.g. a company is liquidated), all directors, partners, trustees, and controlling members of the entity as the case may be must ensure that the records of the entity are retained for the required period. Tax Administration Act - Public Information Presentation