Government anticipates it will start honouring VAT arrears from the end of March when a first tranche of interest-bearing bonds in the amount of $1 billion will be issued – and a further $2 billion more will follow.
Finance Minister Colm Imbert gave the date in Parliament yesterday replying to a question from UNC MP David Lee.
Lee noted the 2020 Budget offering of $3 billion – in the first instance – in interest bearing bonds to eligible VAT – registered businesses. This was to meet VAT arrears.
The T&T Chamber had voiced concerns about small and medium businesses especially which were owed VAT refunds and that none was issued since the Budget statement. The business sector estimated that $4B to $6B was owed over recent years.
Yesterday Imbert confirmed no bonds regarding the VAT arrears had been issued to any businesses to date.”
However it’s anticipated the first tranche in the amout of $1 billion will be issued by end of March, with two more of $1 billion each to follow shortly after,” he added.
“There was no delay. It was always indicated these bonds would be issued in the first quarter of 2020. However, I can say one of the things we ‘ve considered is what the relevant interest rate should be and relevent tenor of the bond in order to ensure businesses derive maximum benefit,” he said.
UNC’s Tim Gopeesingh asked, if bearing in mind the percentage Government had in the bond issue, whether any thought would be given to changing the interest rate in pursuance of the bond. Imbert said, “Yes,”
Imbert added, “We’re seeking to ensure the bonds would be traded at par. These are interest – bearing, tax-free bonds.”
He said Government had to “gross up” the tax free interest to get the interest rate and this is being examined closely, “But it’ll be somewhere between two and a half and three percent based on further talks with the banks to see if they’d trade the bonds at par… so people wil get 100 cents on the dollars.”
On businesses which don’t want to participate in the bond issue, Imbert said the bonds are tradeable, transferable and tax free and with the interest rate so chosen, he added he’d be surprised if businesses don’t want to take a government instrument that could be purchased at par.
On another query, Imbert said final amendments will be made to the procurement law and these will be laid and debated in Parliament in March. This follows talks with the Procurement Regulator on aspects of the law. Debate on the Procurement Regulations will follow the final form of the Procurement Act.
Energy Minister Franklin Khan also told MPs that “at this point Government has no plan to open up the market to allow private operators to import fuel. “
He said Paria Fuel Trading Company is the only entity allowed to import fuel, “I can assure that at no point T&T will be out of fuel,” he added on concerns about shortage if Paria is sold along with the Petrotrin refinery. Khan said when the refinery restarts, it’ll supply T&T with fuel. Until then Paria will supply the market as the sole trader.