Hotels urge Govt. to delay new tax system
Hoteliers battling to stay float amidst the challenges brought by the coronavirus pandemic are pleading with the Government to be more compassionate in the implementation of new digital tax system.
Businesses are spending tens of thousands of tala on upgrading their point of sale systems for the Tax Invoice Monitoring System (T.I.M.S.), which came into force last month.
The system was introduced to gradually get all businesses into a tax system that would ensure everyone paid their fair share. C.C.K. was the first to trial it back in February, and 200 businesses were expected to be fully compliant by 1 July.
Last week, the Ministry of Customs and Revenue (M.C.R.) released the names of the second group of businesses to get on board, which have until 1 October 2020 to be ready.
Managers of Return to Paradise Resort in Lefaga, Ramona Sua Pale and Melanie Toailoa, said they wish Samoa would wait until the tourism sector improves before demanding hotels to get on board with the programme.
Ms. Toailoa said despite her best efforts to be ready by 1 July 2020, the company behind the property management software they used only informed her in late July that the software is currently incompatible with T.I.M.S. It will be another six months minimum before the two systems can be aligned, she said.
“Wait and start all the hoteliers together, in fairness, because we are all going through the same thing,” she said.
In the meantime Return to Paradise has implemented T.I.M.S. but only in part, in order to practice with it and get the staff used to it.
The T.I.M.S requires businesses to have compliant point of sale software, a smart card reader issued by M.C.R, an electronic sales data controller (e-S.D.C.) and an electronic fiscal device system (e-F.D.S.).
All these components will ensure the Government knows exactly how much tax a business ought to be paying based on their sales for the year. But Ms. Toailoa said there is not enough clarity on tax-related legal issues more broadly for such a system to be fully effective.
How staff on shift work in the 24/7 resort environment should be paid and taxed, on a normal day or a public holiday, has not been made clear enough, she said.
“We have written advice from lawyers that say one thing and the people that wrote the legislation will tell you something else.
“Staff will call the hotline and get something else again. We went to our lawyer to get an opinion, because the last thing we want to be doing is be underpaying or doing the wrong thing by our staff.”
On the other side of Upolu at the Sheraton Samoa Beach Resort, adjusting to the new system has been significantly easier as sister resorts under the Marriot group in Fiji use it too.
Hotel Manager, Mark Wendt, said they were able to lift the Fiji procedures and work with the finance departments there to quickly get their heads around the process.
“That is the beauty of being part of a brand, right, you don’t have to rethink the wheel but borrow and tweak and implement it,” he said.
“Whatever luck we have had it has been to our advantage with T.I.M.S. It’s a new system, it’s supposed to help the economy, we’re supposed to embrace it and see where it takes us.”
Mr. Wendt said the team are using the business crash caused by the border closure to their advantage, and are making full use of the M.C.R. hotline available for support.
“While it is a new process there are going to be teething problems,” he said. “The team are working to try and identify that while we are under this period and hopefully we will be able to work with the Ministry to identify and fix it before we pick [business] back up.”
A Chamber of Commerce and Industry survey revealed businesses have received quotes for compliant software and devices up to $10,000, with some quoting as much as $400,000 to be fully ready.
“Close to 40 per cent of businesses are unable to implement T.I.M.S. within the current timeframe due to financial constraints. The financial costs incurred to comply with T.I.M.S. will be felt more severely amongst small to medium enterprises,” the survey report states.
Between border closures or COVID-19 induced lockdowns, software providers have not been responsive or able to guarantee what businesses needed before 01 July, leading to some fearing they will be fined for being late.
“We will most likely require a completely new P.O.S. system in order to be T.I.M.S. compliant. With the current COVID situation, we do not have the funds to purchase a new P.O.S. system, let alone meet our financial obligations,” one respondent reported.
At the time of its submission in June, the Chamber was pleading for more time for businesses before any penalties are applied for late-compliance.
It also asked for the costs of compliance to be an “allowable deduction at 200 per cent.” Beach Fale resorts interviewed by the Samoa Observer said they have yet to be invited to get on board with the T.I.M.S. system.