…to tighten screws on tax cheats

WITH over $20B lost during the first half of this year as a result of the Value Added Tax (VAT) exemptions given to companies, Commissioner General of the Guyana Revenue Authority (GRA) Godfrey Statia has declared that there will be tightening-up on exemptions granted.The Commissioner General told reporters on Monday that VAT exemptions would have been given as a result of the Investment Development agreements made with the Guyana Office for Investment (GO-Invest) over the past two years.

He said that while there are no irregular exemptions, efforts are being made to be strict on the issuance of exemptions.

“What we are trying to do is to tighten it; Ministry of Finance, Go- Invest and GRA sit down and set criteria, rather than them (exemptions) being granted on a willy-nilly basis. So we are developing a set criteria by which we could grant exemptions, that is what we intend to use going forward,” the minister indicated.

Meanwhile, Statia said that much focus will be placed on enforcement and compliance so as to ensure there is an increase in VAT collections overall. The recently appointed Commissioner General said more GRA officers will be sent to businesses to ensure that those who have been escaping the payment of VAT now comply with the laws.

He noted that too much money is lost as a result of tax evasion. “We also have to shift our resources into the enforcement mode and go behind the businesses for them to comply so we are looking more at enforcement, compliance, investigations and further examinations so as to increase in the VAT collections,” said Statia, who was part of a press briefing hosted by Minister of Finance Winston Jordan.

According to the Mid-Year report for 2016, VAT collections totaled $17.3B during the first six months, representing 5 per cent more than the same period last year. VAT on imports declined by $1.4B while VAT on domestic supplies increased by $436.4M.

The GRA head pointed to three reasons behind the shortfall in VAT collection. He said GRA has inherited a lot of exemptions from the previous administration and it is those exemptions that total $20B.
Secondly, he said there are many leakages at the importation level and focus will be shifted to address that. Domestically, Statia said emphasis must be placed on enforcement so that GRA can go after businesses to ensure that there is compliance with tax regulations.

He estimates that there has been a slothful process to refund VAT payments, and as such, there is a backlog of payments dating back to 2013.

“We also would not have paid VAT refunds for a while and that for this year we paid in excess of $2B in refunds… and at the end of the year we expect to pay close to $5B. What has happened is that VAT refunds were not paid timely for 2013, 2014 and 2015,” the Commissioner General added, noting that efforts are being made to “bring the system up to date”.

Statia said too that as much as $4M is being lost per container shipped to Guyana. “…that is why you have to shift emphasis and do more post clearance audits and more investigations and these things.”

Earlier this year, Minister of Finance Winston Jordan said the lax enforcement by the GRA has aided in the limited collection of VAT. “This is what I have been doing for the last six to eight months with the GRA — trying to bring them around to the realisation that their first and foremost responsibility is to enforce the law and to collect the Government’s revenue,” the Government Information Agency (GINA) quoted the minister as saying.