Minister says businesses still dodge tax regulations

February 15, 2024 11:53 pm | Posted in Business News | Share now TwitterFacebook

Compiled by Glenda Willie.

Minister responsible for the Ministry of Finance and Economic Management (MoFEM), John Salong, said there has been much discussion over the past years about ministries not putting enough effort into revenue collection, and compliance has been weak in many areas.

He confirmed there is evidence that some businesses do not voluntarily comply with tax laws and try to avoid paying taxes.

Every citizen must recognise the importance of paying taxes for the services they demand, especially during times of public financial difficulty.

Salong expressed gratitude particularly to every revenue agency, for their commendable work throughout the past financial year of 2023.

Without the dedication of all these agencies, the financial position of the Government might not be as stable.

He acknowledged the economy has faced numerous challenges due to the impacts of three Tropical Cyclones (TCs): TC Kevin, TC Judy, and TC Lola, all of which reached Category five.

However, the Government has acted decisively to mobilise financial resources for recovery.

According to the minister, directives have been issued to exempt essential goods and services to facilitate the rebuilding process after the cyclones. Despite these challenges, revenue collection for 2023 remains on track, and the Government has collected as forecasted for the year 2023.

The final recurrent revenue budget forecast for this year, 2024, is projected to be the highest since independence, Salong announced.

“We need the support of everyone to ensure that the Government meets its revenue target for this year.

“The total recurrent budget revenue for 2024 is estimated at VT47.6 billion,” he said.

“After extensive discussions and evaluations of revenue collection trends from 2020 to 2023, and with government projects ready to commence, it is acknowledged that an increase in revenue forecast is necessary to ensure that the Government makes more efforts to raise revenue, the Ministry responsible for Finance and Economic Management is in the process of setting up a National Revenue Committee.”

The Minister explained that this committee will oversee the work of agencies responsible for revenue generation and develop new policies for the Government to implement to increase revenue.

The work initiated by past legislatures will continue.

He also noted that the government must continue to take a strong stance on increasing revenue and controlling spending.

Revenue agencies must ensure that compliance strategies are effective and efficient.

“There is still evidence of tax avoidance, with many businesses not complying with tax laws.

“I reiterate that every citizen must recognise the importance of paying their rightful taxes to contribute to the overall wealth of our nation, Vanuatu,” Salong said.

“Vanuatu still maintains a narrow tax base, with most of the revenue collected through indirect taxes such as fees, permits, licenses, and charges rather than a variety of direct taxes. In the financial year 2024, the Value Added Tax (VAT) will continue to be the main tax revenue for the Government.

“However, there is a need to strengthen compliance as many businesses are not registered for VAT, leading to underreporting of VAT revenue.

“Revenue collection through border taxes like import duties and excise taxes is expected to increase in 2024, following the easing of international borders. Nevertheless, exemptions granted by the government may have an impact on the total revenue collected.”

The Finance minister assured that ministries have indicated their intention to collect additional revenue compared to previous years, which is reflected in the budget focus for the financial year 2024.

These ministries include the Departments of Fisheries, Customs and Inland Revenue, Ports and Harbour, Agriculture, Trade, Lands, and the Ministry of Internal Affairs through the passport program.