First VAT remittance deadline looms
By Nicosia Smith
Stabroek News
January 31, 2007
Though many businesses are still coming to terms with collecting Value Added Tax (VAT), they must now prepare to remit the collected taxes to the Guyana Revenue Authority (GRA) and an accounting session to help with this was held yesterday.
VAT returns are due by February 21 and this first tax period covers transactions made from January 1 to 31.
However only about one third (50) of the 150 businesses the GRA catered for attended the half-day workshop at Regency Suites in Hadfield Street.
Harryram Parmesar, from the accounting firm Solomon and Parmesar told those present that filing the VAT return is simple once the information is entered correctly into their ledgers.
Parmesar emphasized that it would be best if businesses kept separate sales, purchase and expense ledgers/account books. In these books, they should show the VAT amount in relation to their sales, expenses or purchases. This calculation should be done on a daily basis.
In addition, the ledger should specify the date, invoice number and the description of the service or item. A daily summary should also be done of the standard rate, VAT total and the totals for zero or exempt items (in terms of value).
But some of these suggestions may have come a little too late for some businesses, who have so far failed to keep their accounts as detailed as this, and now have the task of checking their sales, expenses and purchase invoices to determine the VAT charged or paid.
One businessman who declined to be named told Stabroek News that he did not do daily VAT accounts and would not be hiring the services of an accounting firm. Instead, this businessman explained, he let go of four staff in order to hire two additional accounting staff. He said for a small business such as his with 20 staff, hiring an additional two employees for the accounts department was an extra cost.
This businessman also had his entire accounting staff present at the seminar.
Although he was grateful for the information supplied at the seminar, he said he would like one-on-one interaction with the GRA at his business. He believes that this approach is necessary for him to clarify all his VAT concerns. For example, his business supplies services on a large scale to government entities, but certain government and budgetary agencies are zero rated for VAT purposes and this businessman wanted to know the list of these agencies. The GRA could not provide a list at the seminar and asked him to collect a copy from its office.
Meanwhile, the business representatives were warned not to purposely hide any tax invoices or choose not to declare all sales that attracted VAT, since other businesses will be submitting those very invoices to reclaim VAT paid.
The GRA has already mailed or hand-delivered VAT returns packages to over 1,900 VAT registrants; these packages include the VAT returns form and booklets with directions to complete the form. For example, some of the Input Tax information asked for in the form includes the amount of zero-rated purchases, exempt purchases; and for the Output Tax section, zero-rated sales, exempt sales and standard-rated sales.
Businesses will have to be able to prove that the amount of VAT being remitted is correct if the GRA chooses to do an audit. And if there is no VAT payable for the month, and a credit is forwarded, then the business must also prove that no VAT is payable, if the GRA decides to conduct an audit.
Parmesar said records such as a listing and summary of cash receipts and cash payments in respect of daily transactions, stock records in respect of opening and closing stock; purchases and sales ledgers; income and expense accounts; till rolls and tapes; bank statements; copies of customs import and export documents; computer records and any other records related to the business including correspondence and audit reports must be kept for not less than seven years.
It will also cost businesses quite a sum if they fail to file their VAT return forms on time. The VAT Act stipulates under Section 82, that businesses will be liable for a fee of $1,000 per day for each day late or 10% of the tax payable for the period, whichever penalty is greater. And if the GRA extends the VAT return deadline, failure to meet this deadline will cost businesses $2,000 per day and imprisonment of three months. If a payment is owed to the GRA for the tax period, failure to make this payment incurs 2% interest charges, while the GRA pays 1% if it owes businesses.
In opening remarks, the GRA Commissioner General Khurshid Sattaur said the GRA was happy to be associated with the businesses in this process and he hopes such engagements will build working relationships on both sides. And in her closing remarks Commissioner (ag) Hema Khan of the VAT Registration Department said VAT is a self-assessed tax. She stressed the need for proper records.
Parmesar called on businesses not to wait until the last minute to begin preparing the VAT return form and to begin as early as this weekend.