Big business, corporations, lock horns over accounting switch
The Minister of Customs and Revenue, Tialavea Tionisio Hunt, has expressed his disappointment in “big companies” requesting more time to comply with the Government’s tax monitoring reform.
But at least one large business says switching over is coming at costs of up to $200,000 and having the effect of punishing honest operators.
The $3 million Tax Invoice Monitoring System [T.I.M.S.] is an initiative by the Ministry of Customs and Revenue to increase tax compliance amongst businesses and consequently minimise the revenue they lose through tax evasion.
“The Government invested in T.I.M.S. following complaints by members of the business community to level the plain field in terms of paying taxes,” the Minister said.
“The complaint was that the large corporations are the only ones paying their taxes [compared to] medium and small businesses.
“However [since] we have implemented the TI.M.S. the large corporations are asking for extensions,” the Minister said.
“While their concerns are valid in terms of their point of sales [P.O.S.] software [not yet being compatible], but the point is: we acted based on their concerns and the law has been passed but it won’t be enforced until 1 October [chosen for the businesses in the second category of compliance]”.
The Minister singled out Farmer Joe’s, Ah Liki Wholesale and Frankie's Wholesale as examples of businesses that were requesting more time.
“It’s understandable their point of sales software is not compatible with the T.I.M.S. but the tax system was announced last year and the business community were informed about it long before.”
Ah Liki Wholesale General Manager, Asiata Alex Brunt, said the company was working towards adoption of the system but is looking for ways to lower the costs.
“We can confirm we have been vocal about achieving a fair environment for businesses to operate,” Asiata said.
“[The] T.I.M.S. system was discussed last year but it was only in [mid-March] 2020 [when] we were informed we have until 1 July 2020 to comply.
“At that launch, many of us were confused as to how we go about complying and we’ve been trying to find a way forward since.
“Unfortunately for us and many others, it’s a solution that comes at a very high cost. Our costs are now estimated at around $200,000.
“T.I.M.S. has been brought about by the few that act unlawfully for which many now have to pay for. These costs will ultimately be passed to consumers and what we are trying to do is minimise this cost. We need time to find cheaper solutions.”
Farmer Joe's Manager A.J. Cowley echoed concerns expressed by Ah Liki Wholesale, but noted that the issue was not as complex as it may seem.
“The total cost for this full installation [of our updated point of sales system concurrent with an update of our inventory system etc.] and licensing is now at just over $250,000,” Mr. Cowley said.
The grocery chain also said that the COVID-19 lockdown prevented the travel of computer technicians required to reprogram software and train staff in the use of new hardware.
Emails sent by the Samoa Observer to Frankie's Wholesale were not returned.
Asked whether the Government will assist the companies to alter their software to become compliant with T.I.M.S., the Minister said company managers are urged to visit the M.C.R. and discuss their options.
The newly introduced system will help businesses easily compile and provide records of the tax revenue they must send to the Government
Each transaction involving the sale of goods or services will be accounted for in realtime and sent to the Ministry.
The implementation of T.I.M.S. is scheduled to be rolled out in five phases.
The Government offers a free mobile-based version of T.I.M.S. compliant software which can be used to scan goods and transactions, but businesses with high volume say it is unsuitable for businesses with high volumes. The cost of switching to a new piece of point of sales hardware can run to the cost of $10,000 per unit.
Last month the Chamber of Commerce sought for more time prior for the T.I.M.S. to be brought into effect, but the Minister said there was no need for postponement.
In one of the Parliament sessions, Tialavea said the business community was given ample time.
"This system [T.I.M.S.] was discussed in last year's budget and commissioned on March 4 this year,” the Minister said.
“Time was given to the first group [of] 210 businesses. We gave them four months to ensure they are compliant and [can] use the system starting on 1 July.
“It will not be postponed: this system will start in July. All these 210 [businesses], we advise that they come to the office to discuss [their situations if they are having difficulty].”
Tialavea said the Ministry foresees another 1,500 businesses joining the T.I.M.S. register within the next three months, followed by another 2000 in the following months. The final group to be made compliant will consist of 3,000 operations.