Imbert approves VAT deal for Paria

Wednesday, July 10, 2019 - 06:15

Mo­torists will not ben­e­fit from a de­ci­sion by the Min­istry of Fi­nance to ex­empt Paria Fu­els Trad­ing com­pa­ny from pay­ing more than $382 mil­lion in Val­ue Added Tax.

Fi­nance Min­is­ter Colm Im­bert con­firmed that he had giv­en ap­proval for the new­ly mint­ed State en­ter­prise not to pay VAT to Gov­ern­ment on fu­el it had im­port­ed and in a what­sap mes­sage told Guardian Me­dia that there is no re­la­tion­ship be­tween VAT on im­port­ed fu­el and on VAT be­ing paid at the pump.

Mo­torists pay 12.5 per cent VAT at the pump but will not ben­e­fit from any re­lief.

In a let­ter to Paria Fu­el’s Chair­man Wil­fred Es­pinet, which GML has ob­tained a copy, Im­bert wrote, “In May, 2019 the gov­ern­ment of the Re­pub­lic of Trinidad and To­ba­go agreed that in ac­cor­dance with the pro­vi­sion of sec­tion 55 (2) of the Val­ue Added Tax Act Chap 75:06, which ap­plies Sec­tion 124 of the In­come Tax Act, Chap 75:01, to re­mis­sion to VAT Act in the sum, $382,499,481,83 on car­goes of re­fined pe­tro­le­um prod­ucts im­port­ed by Paria Fu­el Trad­ing Com­pa­ny Lim­it­ed as at April 30th 2019.”

Im­bert said the de­ci­sion to al­low Paria not to pay its VAT was in an ef­fort to as­sist the com­pa­ny with its cash flow.

In re­sponse to ques­tions from GML a com­pa­ny spokesman ex­plained that Paria was faced with a sit­u­a­tion where it has to pay­Gov­ern­ment VAT on all the fu­el it im­ports, in­clud­ing fu­el it is buy­ing to re­sell re­gion­al­ly. How­ev­er the re­gion­al mar­kets do not at­tract VAT and it takes time for the Min­istry of Fi­nance to re­im­burse Paria the funds. There­fore it is try­ing to avoid pay­ing VAT on the im­port­ed fu­el in ad­vance.

The spokesman said: “The re­quest was not for Paria to be ex­empt from pay­ing Val­ue Added Tax (VAT), but rather for the com­pa­ny not to have to pay VAT on im­ports in ad­vance.

This was hav­ing a neg­a­tive im­pact on the com­pa­ny’s cash flow, as the com­pa­ny then had to turn­around and re­claim the mon­ey from the Gov­ern­ment as VAT on ex­port sales is ze­ro-rat­ed. For lo­cal sales, Paria col­lects VAT on its re­ceipts and re­mits this to the Gov­ern­ment.”

On Mon­day night, leader of the Op­po­si­tion Kam­la Per­sad Bisses­sar al­leged that fu­el prices will rise and there will be short­ages at the pump be­cause of the chal­lenges Paria was fac­ing in ac­quir­ing US dol­lars to buy fu­el.

Two months ago, the Sun­day Busi­ness Guardian re­port­ed the forex chal­lenges that Paria was fac­ing.

In an in­ter­view with the com­pa­ny’s Chair­man Wil­fred Es­pinet he ad­mit­ted that it was a night­mare find­ing the US $20 mil­lion a month in the bank­ing sys­tem to buy fu­el.

He said: “There is a sub­stan­tial short­fall be­tween the amount of for­eign ex­change earned by Her­itage and the amount need­ed to im­port fu­els each month by Paria. The short­fall is ap­prox­i­mate­ly US$20 mil­lion a month and is cur­rent­ly ac­cessed through the lo­cal bank­ing sys­tem. The process of find­ing a sup­ply (of US dol­lars) in time to meet pay­ment sched­ules is ex­treme­ly chal­leng­ing.

My un­der­stand­ing is that there is no reg­u­la­tion in force that will al­low for­eign ex­change to be di­rect­ed to these im­ports on a pri­or­i­ty ba­sis. As a con­se­quence, car­go of­ten ar­rives in Trinidad and de­lays in pay­ments for the ship­ment re­sults in sig­nif­i­cant de­mur­rage that has to be ab­sorbed by the com­pa­ny.”

Es­pinet added: “While we seek to find a source for the for­eign ex­change short­fall, this im­bal­ance is struc­tur­al. The ul­ti­mate so­lu­tion is to in­tro­duce poli­cies to en­cour­age a more pru­dent ap­proach to fu­el con­sump­tion. This is con­sis­tent with oblig­a­tions re­strict­ing our emis­sions.”

In Jan­u­ary this year the Chair­man had al­so urged the gov­ern­ment to pay its bills on time, which the Min­is­ter of Fi­nance Colm Im­bert tried to rub­bish say­ing that the mat­ter did not arise since the gov­ern­ment was not at the time ow­ing Paria mon­ey. How­ev­er, its clear from the time frame be­ing ex­empt, Gov­ern­ment was in fact own­ing Paria VAT re­funds in Jan­u­ary.

Reporter: Curtis Williams