Over $70M not collected — in export duty on scrap metal
According to an investigative report compiled by accounting firm Ram and McRae, the general rate of 1.5 per cent, which is usually applied in keeping with the Customs Act, was neglected
According to an investigative report compiled by accounting firm Ram and McRae, the general rate of 1.5 per cent, which is usually applied in keeping with the Customs Act, was neglected

By Svetlana Marshall

THE GUYANA Revenue Authority (GRA) has failed to collect more than $70M in export duty on scrap metal, a special investigation into the financial operations and functioning of the Scrap Metal Unit has revealed.According to an investigative report compiled by accounting firm Ram and McRae, the general rate of 1.5 per cent, which is usually applied in keeping with the Customs Act, was neglected during the exportation of scrap metal from December 2011 to June 2015.

“While the Guyana Revenue Authority is involved in the process of facilitating export, it did not collect ‘export duty’ on scrap metal export during the period under review,” the accounting firm stated.

According to the firm, had the rate of 1.5 per cent been applied, the export duty for the period December 2011-June 2015 would have been $70.5M.

“The customs values are derived from detailed information provided by the Guyana Revenue Authority and the value for each shipment can be computed from those records. In all probability there may have been significant understatement of the customs value since the mistaken belief is that no export duty was collectible and that declared values were for information purposes only,” Ram and McRae further explained.

The firm said GRA should not seek to recover these sums because it will likely encounter legal challenges; however, it should ensure that all eligible revenues are collected and the law applied.

In addition to millions not paid in export duty, the Scrap Metal Unit has failed to pay millions of dollars in taxes on behalf of its workers.

“During the period of operation, the unit made monthly payments to inspectors, enforcement officers, administrator and drivers totalling $43.1M without any deduction of PAYE and NIS contributions,” the investigators pointed out.

It was emphasised that it is the responsibility of the employer to deduct and remit the taxes and NIS contributions payable.

The unit also violated the Appropriation Act. According to the report, the unit on March 31, 2015 paid Impression $2.6M for Mashramani items although it had not participated in the national event.

“As far as we are aware, the Scrap Metal Unit did not participate in Mashramani celebrations and the expenditure may at best have been for the Ministry of Housing. This expenditure would therefore have been in violation of the Appropriation Act.”

Based on its findings, the accounting firm is of the opinion that there is a high probability of revenue leakage but because of inadequate reporting, any estimate is merely speculative.

 

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