VAT returns filed on time by 80% of registrants
-32.8% claimed refunds By Nicosia Smith
Stabroek News
March 1, 2007

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Some 80% of the 2,100 businesses registered for VAT filed their returns on time and 32.8% of those filing returns have claimed refunds; the Guyana Revenue Authority (GRA) plans to examine these.

During a press briefing yesterday at the GRA Lamaha Street headquarters the Com-missioner General Khurshid Sattaur said 1,674 or 79.7% of the Value Added Tax (VAT) registrants had filed their returns by the February 21 deadline.

Government is projected to garner some $24 billion from VAT this year, but Sattaur declined to state whether the sum collected for January was a twelfth of that figure ($2 billion). He said, however, that the taxes paid have put the GRA in a favourable position.

"So far, we are on target with our revenue collection," Sattaur said, reading from a prepared statement. Asked about the revenue neutrality of the tax, he was adamant that VAT is a revenue neutral tax, adding that the same revenue gained under the repealed taxes was being gained under VAT.

"Given that VAT is intended to be revenue neutral… the overall cost of living should be the same or lower than it was before the introduction of VAT - we are maintaining a careful watch on prices," he said. This price watch is being done in collaboration with the Consumer Affairs Division of the Ministry of Tourism, Industry and Commerce.

The GRA is also expected to continue advertising the new prices under VAT compared with those under the old Consumption Tax regime. However, Sattaur cautioned that "these prices do not dictate the final selling prices since there are items that could be sold for less than what is published".

Business persons have shown Stabroek News receipts where the wholesale prices of the items they bought to retail, were higher than the recommended retail prices published by the GRA. And as such it was impossible for the items to be sold for the recommended prices.

The GRA also said it would be taking steps to protect consumers' interest by ensuring that businesses comply with the requirements to display their VAT registration certificates, correctly label price tags, issue bills and receipts and maintain proper records. It was also noted that several outreaches by the GRA were done to ensure that businesses meet the legal requirements under VAT.

The GRA has analysed all of the returns and have separated those that are payable and those that are due for refund, Sattaur said.

"We are viewing the number of returns that are due for refunds, at face value, with great concern," he said. VAT Commissioner Hema Khan told the media that 550 of the returns filed claimed refunds.

"I should like to say that we have quite a few options open to us to determine whether or not we accept these returns or to proceed to assess those based on the face value," emphasized Sattaur in the statement.

Under the VAT law, the commissioner noted, the GRA can examine returns filed with the underlying records of the businesses and if there are discrepancies, can choose to estimate an amount of VAT payable. These examinations can also ultimately lead to audits.

"Businesses should therefore endeavour to maintain adequate books and records that can be used independently to test and verify the accuracy of the returns," Sattaur said. Once VAT returns are cleared by the GRA, businesses exporting 50% or more of their items or engaged in mainly zero-rated supplies, can expect a VAT refund no later than March 31. Others claiming refunds will have a credit forwarded to the next tax period until six consecutive tax periods.

In the meanwhile, VAT and Excise Tax returns and payments for the month of February are due on March 22.

"While we believe that we have made a good beginning for VAT in Guyana, we are not complacent and we recognize that there are many challenges still to be overcome."

Good cause

The commissioner said he had information about businesses that ought to be registered for VAT but which have not done so. The GRA is identifying those businesses that fall into this category, to have them registered. Last year the GRA had said it was targeting 2,500 businesses for VAT registration since this figure will bring in the targeted revenue.

Businesses that should register and have not done so will face a penalty of double the amount of tax they should have remitted since VAT was implemented, plus interest and late filing penalties, or a fine of $25,000 and imprisonment for up to two years. Sattaur also indicated yesterday that it is necessary for businesses to report to the GRA if they would be filing returns late and the law in this case provides that if "good cause" is provided for late filing, the commissioner can waive the penalty. This notification must be done by a letter to the commissioner. There is a $1,000 penalty for every day the return is filed late and a $2,000 per day penalty if an extension is given and it is not met. In addition, there is a 2% per month interest on late VAT payments.

Consumers were again asked to demand receipts for purchases and report illegal practices.

The GRA said some VAT registrants are engaged in dishonest business practices such as having dual books and offering consumers VAT-free prices without bills.

"We want to remind consumers that if they choose 'VAT-free prices' they are allowing these businesses to get away with greater profits for their personal gain," argued Sattaur, "and they are contributing to fraudulent activities and to businesses being unaccountable for the tax they should pay."

PNCR Parliamentarian Winston Murray had said at a VAT seminar in November held by the party, that an impact assessment had shown that the government collected $16.4 billion from the combined eight taxes repealed. These were Consumption Tax (5%-128%); Travel Voucher Tax (15%); Service Tax (10%); Premium Tax (6%-10%); Hotel Accommodation Tax (10%): Entertainment Tax (5%-25%); Purchase Tax 30% and above and Telephone Tax (10%).

Murray had said that the government said it expected to gain $16.9 billion under VAT, based on the official GDP estimates. The estimates from the official GDP, he had noted, were underestimated by 40% and the government was expected to gain $20.1 billion under VAT from the real GDP making VAT at 16% revenue positive, at the macro level. Murray was making this argument to support a reduction of the VAT rate from 16% to 15%. The government has since repealed all but two of these taxes namely the Premium Tax and the Travel Voucher Tax.

Consumers are advised that a VAT Help Desk operates from 8 am to 4.30 pm Monday to Friday at the VAT and Excise Tax Department, 210E Albert and Charlotte Streets, Bourda, Georgetown and it is open to the public. The Help Desk number is 227-7929.

The introduction of VAT on January 1 was followed by widespread confusion throughout the country, widely varying practices by businesses and a hike in prices across the board though some prices should have come down and some should have gone up. The problems eased somewhat after the government expanded the list of zero-rated items to include poultry and other important food items.