While I appreciate the fact that the National Health and National Insurance are governed by separate Boards, the penalty for late payment should be consistent between these boards. The penalties for these Boards should also be the same as the Ministry of Finance which oversees the Business licence fees and Accommodation taxes. To be fair, I believe at one point, all bodies were charging the same 10% but somehow the rates change.
National Health Penalty
The penalty for the late payment of National Health Insurance is now 3% per month. This was change in 2014 after the amnesty period. Therefore, the first month will be 3%, the second month will be 6% and the third month will be 9% etc.
National Insurance Penalty
The penalty for the late payment of National Insurance change in 2011 after NIB offered the first and only amnesty. The penalty is now 10% for the first month and then an additional 3% for each month outstanding. Therefore the second month penalty will be 13%, the third month penalty will be 16% etc.
Business Licence Penalty
The penalty for the late payment of Business licence is 10% per month. Business licences are to be renewed by April 1st and if you renewed after April 30th, it will be 10% per month. If a business discontinues to operate, they must inform the Business Licence team otherwise, they will continue to charge the 10%. The first month will be 10%, the second month will be 20% and the third month 30%.
Accommodation Tax Penalty Rate
The penalty rate under the previous Hotel and tourism taxation ordinance was 10% per month for every month you were outstanding. Therefore, if you were outstanding for a year, the penalty would have been 120% and if you were outstanding for two years, the penalty rate would have been 240%
Based on section 28 of the new Hotel, restaurant and tourism taxation 2019 that the penalty rate has been changed to 20% and then an additional 1.5% for each month the taxes are unpaid. I think this new proposed rates are much better than what we currently have so I want to thank the Government for reviewing and implementing this change.
For example, if a company has $20,000 in unpaid taxes for 24 months, the penalty under the previous law would have been $48,000 plus the $20,000 unpaid taxes resulting in a total outstanding amount to Government for $68,000. Under this proposed law, the company penalty would be $11,200 plus the unpaid taxes of $20,000 resulting in a total outstanding amount of $31,200. This company would save $36,800
Financial Services Commission (FSC) penalty.
The FSC charges a penalty of a flat fee of $350 for every year a company does not pay their annual returns. If the company does not pay the annual return, the company is not consider to be in good standing.
Fortis TCI is a private company and their penalty Rate is 2% per month is charged on all unpaid rates. Fortis also disconnects you if you do not pay by the required deadline. You have to pay the full amount to be reconnected.
Provo Water Company
Provo Water Company is also a private company and the penalty is 2% per month just like Fortis. PWC also disconnects you if you do not pay by the required deadline. You have to pay the full amount to be reconnected plus a flat reconnection.
FLOw and Digicel
Flow and Digicel do not charge a penalty. However, you will be disconnected if you do not pay your bill by the required time.
- A flat fee for late payment should be levy on business rather than the high% rate.
- At the end of each month, when payments are due, TCIG should run a report on who did not pay and let them desist from operating until they pay the taxes. If not, the taxes and penalties will continue to grow. Both TCIG and the customer will benefit from this.
- The recent amnesty waiver will not resolve future issue if customers do not have the discipline to pay the taxes on time.
- Business Licence should not be renewed if taxes are outstanding.
- Perhaps the payment dates for all taxes should be the same.
In addition to the above, I encourage everyone to familiarize themselves with the laws in their industry especially the accommodation taxation laws. Basically all services that are provided to guests during their stay at any accommodation are taxable. However, many of us do not know that and when the audit department inspects your books, you will be liable to pay the taxes and will incur not just the tax liability but also the penalties associated with it. It is interesting to note that the private sector penalties are lower than that of the Public sector. It appears that most people pay their taxes on time and so now is the time to have a flat rate across all the Public Sector Bodies.