Finance Minister Colm Imbert has said an inefficient VAT system is affecting government’s ability to pay VAT returns.

Imbert was responding to questions from reporters at the launch of the TT Stock Exchange Mentorship Programme on Tuesday, held at the Hyatt Regency in Port of Spain.

“We have an inefficient VAT system,” Imbert admitted. “The problem with the VAT system is compliance. We have heard all sorts of suggestions – maybe we should have a sales tax – but it would have the same compliance problems. The problem with the VAT system is compliance.”

Imbert said government prioritises paying out arrears to smaller enterprises first, but larger companies are still owed tens of millions of dollars.

“In some instances $100,000 is make or break for a business in terms of VAT refunds. There are large energy companies that are owed $50 million. When we pay refunds we always start with a million or less first, to clear that off, and move upward.”

Last month the TTMA, as well as business magnate Arthur Lok Jack, called for a faster rate of payouts of VAT returns during a post-budget forum hosted by the TT Manufacturing Association.

Lok Jack described the slow payments as a “tremendous blow” to manufacturers’ cash flow.

“I think in my group alone the Government has tens of millions of dollars in VAT refunds outstanding and we are not getting it back and this is money that we need,” Lok Jack said at the TTMA forum. “You cannot incentivise us to get into exports, then penalise us with VAT.”

For fiscal 2022, Government paid more than $4 billion in VAT returns. At the launch on Tuesday, Imbert repeated what he said in the budget, that more VAT bonds would be issued to continue addressing the arrears.

“I am painfully aware of the problem of delayed VAT refunds and how it affects small businesses in particular,” he said.

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