VAT close watch under way
By Mark Ramotar
Guyana Chronicle
January 5, 2007
THE government is taking urgent steps to rectify the initial hiccups and glitches associated with the implementation of the Value Added Tax (VAT), Cabinet Secretary Dr. Roger Luncheon announced yesterday.
He said the glitches are mainly due to interpretational issues about the tax and price gouging by some very unscrupulous businessmen.
Luncheon told reporters the government is paying “very close attention” to the general implementation of VAT and more specifically to the “acute developments” hindering a smooth implementation of the much talk-about tax.
He noted that while the implementation and execution of the tax is done mainly through the Guyana Revenue Authority (GRA), it is also being closely monitored by other central government agencies, especially the Ministry of Finance and the Ministry of Tourism, Industry and Commerce.
&Notwithstanding it’s only the fourth day (since VAT came on stream), the sentiments are that the implementation of VAT is proceeding apace and as anticipated, glitches have occurred,” Luncheon told his first post-Cabinet news conference for 2007 at the Office of the President.
The glitches he referred to fall under two main categories relating to interpretational issues - such as the VAT law and regulations, and price gouging by unscrupulous businessmen, whether intended or otherwise.
With respect to price gouging, Luncheon said “it is evident that there are some business people who are not VAT registrants but are raising prices, either specifically claiming it is due to VAT, or by a variety of means suggesting it is VAT related”.
Noting that this practice is illegal, he said the malpractice is evident by the refusal of business people to give receipts to customers on request.
He said, too, that some VAT registrants are involved in the consolidation of prices of items purchased in a ‘basket of goods’ where some items are not `VATable’ but across the board 16% VAT is being applied.
Many times the basket contains zero-rated goods that ought not to attract VAT but yet still there are some businesses that are applying across the board 16% VAT,” he told reporters.
He said the GRA is taking serious note of these developments and is taking actions to correct them.
Luncheon said the interpretational issues have created some problems that the GRA is urgently trying to rectify.
One of the most prevalent problems in this category, he said, has to do with the treatment of existing stocks and inventory according to the law (the transitional arrangements).
He alluded to the fact that some VAT registrants are still applying the 16% VAT to prices of eligible goods that already included the Consumption Tax, which is illegal.
On this note, he said GRA Commissioner General, Mr. Khurshid Sattaur will be available daily to respond individually or collectively to all issues raised during this period of VAT implementation.
Luncheon stressed that the circumstances under which VAT can be applied to stock and inventory on hand before January 1, are laid out in the legal provisions on transitional arrangements which the GRA is prepared to enforce.
“At this early stage, VAT implementation will continue to throw up glitches and issues that warrant timely interventions,” he contended, adding that the GRA, the Ministry of Finance and the Ministry of Tourism, Industry and Commerce are all on board to defend the VAT tax regime and ensure its intentions, with regards to the different categories of stakeholders, are preserved.
On Wednesday, Sattaur announced that the GRA will be instituting charges against three businesses found contravening the VAT laws which went into effect January 1.
This, he said, came about following inspections by GRA officials that revealed several irregularities by businesses, including refusing to charge VAT, charging without having a registration certificate and charging VAT on zero rated items.
While several offences were recorded, Sattaur had said “there was general improvement with compliance by a lot of the businesses.”
The new taxation system replaces the 30 per cent consumption tax with the 16 per cent VAT.
Under the new system all basic food, educational and medical items and fuels used for cooking and transport are zero-rated or exempt.