The Minister of Customs and Revenue (M.C.R.) has explained the driving reasons behind a Cabinet directive to review the Taxing Invoice Monitoring System (T.I.M.S.) and whether it is a financial burden to small developing businesses.  

Prime Minister, Fiame Naomi Mata’afa in her weekly press conference last week Friday said the decision was made by Cabinet for the responsible Minister and the Ministry to take action.  

The $3 million tala T.I.M.S. is a web-based monitoring tool which would enable real time capture and monitoring of point of sales by the Revenue Office on how much tax should be collected from the businesses. 

Fiame said the Cabinet has instructed the M.C.R. to look into the issue of the affordability of the system on small businesses based on their revenue and profit. 

In an exclusive interview with the Samoa Observer, Tuala Iosefo Ponifasio who is also the Deputy Prime Minister confirmed the Cabinet's decision and clarified the reasons behind the recommendation. 

"Yes, I can confirm the Cabinet's decision to review T.I.M.S. with the view of assisting in particular small businesses which may be affected by the strict application of the law to adopt T.I.M.s. at the early stage of their development," Tuala said. 

"The government has been specific in suggesting to consider whether small businesses earning the threshold of $400,000.00 or less per year to be T.I.M.S. exempted under the law to allow for these small businesses to grow and be able to contribute effectively at a later date when they become more sustainable."

When asked to explain what prompted the recommendation from Cabinet, Tuala said: "The general public view is that the previous Government had passed into law the deployment of the TIMes as a measure to capture the business owner to comply with their tax obligations. 

"The lack of public consultation brought a lack of understanding and appreciation of T.I.M.s and what it can do for the business and for Samoa. 

"Therefore, T.I.M.s could be seen as a double edge sword or just another device encroaching on people’s businesses. T.I.M.s is a tool that offers support to businesses that want to comply with their tax obligation which is the law. 

"The new government through my Ministry has had time to look into T.I.M.s to determine how T.I.M.s can help contribute to our country’s revenue more effectively. We are also trying to unravel the myth T.I.M.s is out there to get your tax payment and that it is expensive to set up and operate. 

"Cabinet at its last meeting when T.I.M.s was presented agreed [that] T.I.M.s should be adopted in the right way so it is more of a management tool to improve compliance rather than an entrapment tool getting in the way of your business. 

"An example, some business people become so busy running the business to generate revenue but forget to file V.A.G.S.T. Returns on time. "T.I.M.s will record your sales and automatically fill in your return and tell you how much V.A.G.S.T. you have to pay each month. Firstly, you are compliant with the filing of your return on time avoiding penalty and secondly, your V.A.G.S.T. has been calculated for you and you save time."

He then went on to explain the steps and processes the Ministry will undertake in order to implement the recommendations from Cabinet. 

"The government believes there ought to be more consultations to ensure the business community's buy-in so as to promote compliance. The Government feels things must be explained properly. 

"How much would it cost and how it works and be adopted as part of the business. People complain when they are not consulted and when they do not understand something fully which is normal.

 "As the uncertainty of COVID-19 continues, the government requires reliable action tools such as T.I.M.s to collect and ensure liquidity and sustainability of the country’s economy as we work on a roadmap of a recovery and resilience plan for Samoa for the next 12 months.  

"T.I.M.s has been part of our work plan since we took over Government in July 2021. Our team at the Ministry are well versed with what they have to do and they have my support. 

"Communication is the key to harmonizing the business community with the Ministry of Customs and Revenue as we work to improve dialogue through the Chamber of Commerce and stakeholders.

"For the Ministry, our work now is to continue the review of the T.I.M.s policy framework for Cabinet to approve, test monitoring, collection, and communication systems. 

"We will stage more meetings with interested groups and individuals over the next couple of weeks before reporting back to Cabinet. Once Cabinet endorses our review. 

"Letters will be sent to nominated businesses; the Ministry will provide support where necessary. There will also be general notices to inform the wider community and to seek their participation."

The T.I.M.S is an initiative of the M.C.R. which was passed in parliament by the former Government with the hope of increasing tax compliance as well as crack down on tax evasion.

The trial of the new system began last year in selected big businesses on Upolu and was proposed to be rolled out in five phases. 

The introduction phase made it a requirement for businesses to employ new computer monitoring systems in order for them to comply and register on the system. 

Not long after the trial began the M.C.R. allowed extension for the business community to register on the real-time accounting system, warning them there would be no more extensions given.

The more than 200 group one businesses – which included businesses with sales exceeding $1 million – had originally been required to comply with the new system by 1 July 2020. But that deadline was extended to 1 January 2021. 

Certain businesses have already been granted exemptions from meeting the deadline on a case-by-case basis. 

Similarly, the second group slated to introduce the new accounting system had their deadlines extended to April this year. 

The third group, which had previously been expected to be in compliance earlier this year, was pushed back to July this year to implement the new system. 

Groups four and five were expected to commence using the new real-time monitoring system by 1 October 2021 and 1 January 2022 respectively. Group five is composed of small businesses such as corner shops.