VAT complaints
By Chamanlall Naipaul
Guyana Chronicle
January 3, 2007
THE introduction of the Value Added Tax (VAT) system yesterday was enmeshed in controversy, confusion and frustration on the part of consumers who had to pay more for items because many businesses in Georgetown were apparently imposing double taxation in arriving at their prices.
Many store owners appeared to have simply added the 16% VAT on the retail prices of items they had at the end of last year.
Several entrepreneurs in the main commercial section of Regent and Water Streets who spoke with the Guyana Chronicle had similar stories of customers becoming abusive and angry when they were told they have to pay VAT.
Some business persons felt Guyana is not ready for the implementation of VAT because the operations of many businesses are not computerised.
One businessman complained bitterly that as soon as customers heard about the VAT charges, they stormed out of his store and said if this trend continues he may have to close his business.
Others believe the rate of 16% is too high, while many feel it was implemented too hurriedly and businesses should have been given more time to clear old stocks.
One prominent businessman, however, had a different view, offering that Guyanese have a tradition of rejecting anything that is new but will become adjusted to VAT with time.
He added that VAT was inevitable as it has been working successfully in North America, Europe and several Caribbean countries.
The controversy yesterday seems to have stemmed from businesses deriving their prices by charging VAT on goods acquired last year on which they have already paid taxes and duties.
Many business persons said their accountants have advised them to calculate their prices in that manner.
Commissioner General of the Guyana Revenue Authority (GRA), Mr. Khurshid Sattaur, who headed a team visiting businesses for a first hand look at the implementation of VAT, conceded that the GRA during yesterday received numerous complaints about businesses overcharging their customers and called these business people “unscrupulous.”
Sattaur explained that the law has provision for stock relief for goods acquired up to December last year and as such he finds it surprising that businesses have been ripping off customers.
He said prices should have reflected this relief.
He, however, lauded one particular established business for putting out advertisements that it will be maintaining its prices prior to the implementation of VAT.
He also commended those businesses that have their VAT certificates prominently displayed and signs indicating whether the prices on goods are VAT inclusive or not.
The Commissioner General assured that the GRA will continue to monitor the implementation with the intention of ironing out the hitches that beset the process.
One of the fears hovering over VAT registered business persons is what they describe as unfair competition from vendors who will be excluded from the VAT net.
On this score Sattaur disagreed, explaining that vendors will have to include VAT in their mark ups because their prices will indirectly incorporate VAT as they will be purchasing from stores which have to pay VAT. He further submitted that vendors will not benefit from tax credit input unlike the businesses registered for VAT.
Sattaur also stressed that the GRA will take a firm approach with those businesses which offer the option to customers to pay or not to pay VAT.
He made it clear that it is illegal to offer such an option.
Sattaur said the GRA has been getting a lot of feedback on VAT, and he is grateful for the response because it will help iron out the kinks that initially affect the implementation process.
The VAT legislation was approved in the National Assembly last month with the main opposition People’s National Congress Reform-One Guyana (PNCR-1G) supporting the measure.
The law became effective January 1.