Value Added Tax (VAT)Offences and Penalties
In our previous article we mentioned that theTax Administration is strengthening its compliance and enforcement across all areas of tasks conducted by our staff as delegated through the Director’s powers under the VAT Act No. 12 of 1998 [CAP 247]. This initiative is directly underpinned and linked
with our principle and commitment of having a VAT level playing field for all in Vanuatu.
As in the case with any taxation Act, the VAT Act has provisions which enables the Director, through the Tax Administration, to enforce the tax. These enforcement provisions take the form of offences against the VAT Act (Section 51(1) and the associated penalties imposed on persons found guilty of these offences under (Section 51(2) to 51(6)).
The Tax Administration is taking a responsible and proactive approach to educate all VAT registered persons and others on the various offences outlined in the VAT Act and we will do so by explaining the offences in detail in our next few articles. We have taken this approachand correctly apply the application of thesefines and penalties as stipulated under the VAT Act.
Failure to register – Section 51(1)(a)
An offence is committed under Section 51(1)(a), where a person fails to apply for VAT registration in accordance with Section 12. This offence is committed regardless of whether or not the person was aware of their liability to register under Section 12.
On first occasion, on which a person is convicted of any fine such offence (or offences) the person becomes liable to a fine up to vt100,000 vatu. Upon second conviction, the fine is increase to 200,000 vatu and/or on subsequent conviction will proceed with prosecution actions.
Failure to furnish any return or information – Section 51(1) (b)
Under Section 51(1)(b), a person who refuses or fails to furnish any return or information as and when required by the VAT Act or by the Director commits an offence. For example, the due date for filing a VAT return is usually the 27th day of the month following the end of the taxable period. It is therefore an offence if a return is not filed by the due date.
The TaxAdministration is committed whenever the act or omission is done regardless of the intentions or motives of the person involved. It is an offence of strict liability, i.e. it need not be done knowingly.
On the first occasion on which a person is convicted of any such offence (or offences) the person becomes liable to a fine of up to 40,000 vatu for each offence for each month of the default. Upon conviction on any subsequent conviction the maximum fine is increased to 70,000 for each month of the default. For any subsequent offences, the Office will proceed with prosecution actions.
Making any false return, statement, etc. – Section 51(1)(c)
An offence is committed under Section 51(1)(c) where a person:
- Makes any false return;
- Makes any false statement;
- Makes any false declaration; or
- Gives any false information.
Knowing it is false, or having disregard as to whether it is false or not. It is also an offence to intentionally mislead or attempt to mislead the Director or any other Officer of the Department. (Note- the motive for committing the offence is irrelevant).
On the first occasion on which a person is convicted of any such offence (or offences) the person becomes liable to a fine of up to 100,000 vatu. Upon a second conviction the fine is increased to 200,000 vatu. For any subsequent offence, the Tax Administration will proceed with prosecution.