How to register your business for VAT

 

Value added tax (VAT), is charged under Section 6 of the Value Addrd Tax Act 1989, "on the entry of goods imported into Trinidad and Tobago and on the commercial supply within Trinidad and Tobago of goods or prescribed services by a rregistered person". Section 14(1) of the Act defines a " commercial supply" as, "a supply of goods or prescribed services that is made in the course of, or furtherance of, any business". A prescribed service means any service not listed as an exempt service under the Act. Exempt services include for example, medical, dental, hospital, optical and financial services. Thus a supply will be taxable if:

    1. It is one of goods or prescribed services;
    2. It is made in the course of, or furtherance of, any business; and
    3. The supplier is required to be registered under the Value Added Tax Act.

What Constitutes a Business

The question that follows is what then constitutes a business? For the purpose of the Value Added Tax, a business generally refers to a trade, profession or vocation, but the following activities are also regarded as a business:

It should be pointed out that an activity does not cease to qualify as a business merely because it is not carried on with any degree of regularity. Hence, even a single undertaking of an activity, for which admission is charged, would be sufficient to deem the undertaking a business.

Requirements to Register

When a person establishes that he makes "commercial supplies", ie , supply of goods or prescribed services in the course of, or furtherance of a business, the next thing he ought to do is determine the level of these supplies, since he may, depending upon the amount, be required to register under the Value Added Tax Act. A person would be required to register if he makes or intends to make commercial supplies (gross sales) in excess of $200,000 within a consecutive 12-month period. For VAT purposes it is not the business activity, which is registered, but the person who conducts it and the registration covers all business activities of that person. " Person" in this context means not only an individual, but also a company, partnership, unincorporated club or society. There are some aspects of the registration process, which may differ according to the person making the application for registration. We will first deal with the registration procedure as it pertains to the sole proprietor.

Sole Proprietor

A sole proprietor must register for VAT having made commercial supplies of $200,000 or more in a 12 month period. Applicants please note that the VAT administration does not register persons, simply because they may wish to apply for a tender. The procedure with regards to tender is as follows: The person who is making the application for a tender must first apply for a VAT Clearance Certificate to any of the VAT office. If he/she is granted the tender and intends to make commercial supplies of $200,000 or more, then it is at this point, the person applies for VAT Registration.

Documents Required

The sole proprietor or business owner must complete all sections on the application for registration form or VAT1 as it is called.

If a section does not apply, please indicate so by filling in the words "Not Applicable". or N/A on the form.

In the case of an existing business, the proprietor must submit a statement of his gross receipts for the past 12 months or less which must be signed and dated by him/her.

Partnership

The partners must complete both the VAT1, which is the application for registration and the VAT2, which is the registration detail of the partnership. A partner, preferably the precedent partner should sign the VAT1.

Documents Required

The documents to be supplied by the partner are :

Limited Liability Company

Required Documents

Conditions

Established before April 15th 1997

Established After April 15th 1997

  1. A completed application for Registration form (VAT1) which must be signed and dated by a Director. In the case of a foreign company, an authorize agent is allowed to sign the application form. A letter of authorization signed and dated by a director of the foreign company must be submitted. In addition, where the directors of a company are all foreign based, a commitment in writing, stating the person responsible for the preparation and submission of the VAT return must be submitted to the VAT registration.

1. Same as before April 15th 1997

 

  • A completed VAT2 form giving details such as the directors' home addresses, individual BIR file numbers and their signatures.
  • 2. Same as before April 15th 1997

  • An original and a copy of the Certificate of Incorporation
  • 3. Same as before April 15th 1997

  • An original and a copy of the Certificate and Articles of Continuance
    1. An original and an copy of the Articles of Incorporation, affixed with the Registrar General's Stamp.

  • An original and a copy of the company's BIR and PAYE file numbers.
  • 5. Same as before April 15th 1997

  • A cash flow projection for 12 months which must be signed and dated by a company director or a company accountant.
  • 6. Same as before April 15th 1997

  • An original and a copy of the "Notice of Directors" and the "Notice of Address"
  • 7. Same as before April 15th 1997

  • Original and copy of any of the following must be provided as evidence of commencement of business: sales or purchases invoices, current contracts or agreements, customs documents, rent receipts or any other document which can support the claim for Registration.
  • 8. Same as before April 15th 1997