Numerous companies remain outside tax net
Auditor-General
Stabroek News
November 30, 2003
Of the 3,960 companies registered with the Internal Revenue Department (IRD), only 458 had submitted annual returns up to July 2003.
Some 315 of the companies were identified as defunct, according to records made available to the Office of the Auditor General.
Another 1,817 of those companies were deemed to be inactive in 2002 compared with 262 companies for 2001.
These are among the findings of the Report of the Auditor General on the 2002 Public Accounts of Guyana.
The report, which was tabled in Parliament last Monday, had been presented to the Speaker of the National Assembly on October 31.
The Auditor General, in his report, recommended that the IRD carry out a special exercise to identify all the companies considered inactive so that the records can be annotated accordingly and that the appropriate action can be taken. In 2002 the IRD instituted legal proceedings against three companies for their failure to submit returns.
For 2002, the IRD collected $22.1 billion in revenue compared with $19.6 billion for 2001, an increase of $2.4 billion or 12.43%. The IRD, along with the Customs and Trade Administration (CTA), falls under the purview of the Guyana Revenue Authority (GRA).
Income tax accounted for the largest collection, with $9 billion for 2002, compared with $7.8 billion for 2001. Of the $7.4 billion collected as corporate tax, $6.6 billion came from the private sector.
The report states that for the public sector the sum of $464 million was budgeted for but the actual collections amounted to $759M.
Some $9 billion was collected as personal income tax. But an examination of the Default Register revealed that in 292 instances, employers failed to submit returns for extended periods during 2002. The report states too that there is evidence that the IRD sought the assistance of the Director of Public Prosecutions in respect of some of the defaulters. Fifteen of the defaulting companies were taken to court for failure to remit personal income taxes.
The report points out that the system of revenue collection in the administrative regions or the suboffices provides for the submission of Collectors' Cash Book/ Statements (CCBS) to the IRD on a halfyearly basis. But an examination of the IRD records revealed that there were no submissions of CCBSs or 'nils' returns from four sub-offices in Regions 2, 5, 6 and 7 for the first quarter of 2002. Corrective action was taken from the second quarter of 2002, the report states.
A total of $1.3 billion was collected as withholding tax for 2002, representing a decrease of 4.5% over 2001's collection of $1.4 billion. According to the report, there was no evidence to suggest that checks were carried out on the records of the banking institutions to determine the accuracy of the returns on which the taxes were based. The IRD Commissioner explained that the reliance is placed on the integrity of the institutions and as such, no checks are carried out.
An amount of $1.1 billion was collected as travel tax and this includes $717.5 million relating to the travel voucher tax. This represents an increase of $22.3 million or 3.22% over 2001. The report states that according to the records of the department, five airlines made late payments of taxes and there was no evidence that penalties were imposed. At the time of the audit in July, a special exercise was carried out to impose penalties on the defaulting airlines.
The IRD collected $781.1 million as income tax from selfemployed persons, the report states. It said too that according to the department's records, 17,428 persons were deemed self employed in 2002, down from 21,132 in 2001. According to the report, the IRD Commissioner said that the reason for the decrease was because there was a "clean up" exercise of the system, which revealed that some files were erroneously classified as selfemployed.
The amount collected from the self-employed included $3 million collected as professional fees from 302 persons. The report states: "It is evident that a significant number of professionals did not honor their obligations...since the records of the department showed a total of 739 taxpayers at the time of reporting..." The recently passed Fiscal Enactments Act has from September 1 increased the Practice Certificate Fee for various categories of professionals, with the highest paying category being doctors and lawyers. They have to pay $250,000 per year for their certificate.
The department collected $861 million in respect of purchase tax, motor vehicle licences and other miscellaneous revenues collected by the Licence Revenue Office.
Bank account No. 3025 reflected a large balance of $4.3 billion as of December 31, 2000, resulting from a technical error made in 1999, the report states. Two years after, at December 31, this balance was reduced to $1.3 billion and it was recommended that this be transferred to the Consolidated Fund.
The Auditor General's report says that the situation remains the same, up to the time of the audit in July 2003.
Bank account No. 3018 reflected a balance of $128.7 million as of December 31, 2002, but the account has not been reconciled since December 2000, the report states.
The report states that the IRD collected $110.6 million in hotel accommodation tax, which is a ten per cent tax payable by hotels with over 16 rooms. During 2002, five hotels submitted monthly returns six months late. They are required to submit their returns within 15 days after the close of the month. The Fiscal Enactments Act also provides for such hotels to levy a 5% tax on services in addition to the hotel accommodation tax.