MEASURES IN SUPPORT OF GREEN AGENDA AND PROTECTING THE ENVIRONMENT

• TAX exemptions on the importation of items for wind and solar energy investments. In addition, a one-off tax holiday of two years for corporation tax for companies involved exclusively in such importation;
• Tax exemptions for investment in, and construction of, water treatment and water recycling facilities. In addition, a one-off tax holiday of two years for corporation tax for companies involved exclusively in such importation;
• Tax exemptions for investment in, and construction of waste disposal facilities with particular reference to recycling facilities for plastic items. In addition, a one-off tax holiday of two years for corporation tax for companies involved exclusively in such importation;
• Exemptions of customs duties and taxes on machinery and equipment to setup charging stations for electric vehicles;
• Exemptions of customs duties and taxes on greenhouses and component parts for use in the agricultural sector;
• Lowering of excise tax on hybrid and electrical vehicles;
• Zero-Rate of Excise tax on the following: a. Specially-designed Refuse (Garbage) Trucks; b. Bio-fuel (bio-gas or bio-diesel);
• Restriction on used tyres – The importation of used tyres for motor cars, vans, pickups, SUVs, and mini-buses, will be restricted from entering Guyana, with effect from April 1, 2017. Vehicles described above, which are imported into Guyana after April 1, 2017, will be required to be fitted with new tyres (including the spare). A “phase out” period for existing stocks of used tyres will be allowed. Used tyres that have been ordered and shipped will be allowed a period of three months to have these orders completed;
• Reduction of duty on new tyres – The Customs duty on new tyres will be reduced from 30 per cent to 15 per cent;
• Imposition of an environmental levy of $10 per unit on the importers and local manufacturers of products using non-returnable metal, plastic or glass container of any alcoholic or non-alcoholic beverage. The new environmental levy with penalties will be implemented by amending the Customs Act, Chapter 82:01 to include a section to impose this levy, and will apply, across the board, on both imports and locally manufactured products, thus ensuring that Guyana complies with the provisions of Article 90 of the Revised Treaty of Chaguaramas.

MEASURES TO REDUCE INEQUALITY AND INCREASE DISPOSABLE INCOME
• Increase income tax threshold – An increase in the current threshold of $660,000 per annum to the greater of $720,000 per annum or one-third (1/3) of the employee’s salary. An additional 7,600 persons will be taken off the tax register;
• The reduction in the Personal Income Tax rate from 30 per cent to 28 per cent for individuals earning less than $2,160,000 per annum or $180,000 per month. A new rate of 40 per cent will be applied to the incomes of individuals earning in excess of $2,160,000 per annum. These measures will allow for an annual increase in take home pay to persons earning under $720,000 of $18,000, and for persons earning $2,160,000 to benefit from an additional annual take home pay of $46,800. Further, in the case of the higher paid employees, by allowing for one-third of their income to be tax free, the incidence of tax will not exceed 25 per cent, thereby allowing for a higher “take home” pay. This would reduce the need for tax free benefits, in kind, now being paid to employees in the private sector in lieu of salaries, and claimed by self-employed persons in lieu of income. The loss from the implementation of these tax measures is $3.9 billion, which can used to boost personal savings and consumerism;
• Repeal of Section 33E (4) of the Income Tax Act as it relates to the sale of gold or diamond not being taken into account in ascertaining the chargeable income of the persons who owned gold or diamonds. This repeal seeks to bring these operators within the purview of all the Tax Acts;
• Increase in the Tributors Tax from 10 per cent to 20 per cent – The tax on tributors has remained unchanged, since its inception in 1998. This increase, which is in line with the withholding tax, is the first to removing distortions and multiplicity of tax rates;
• The imposition of a two per cent withholding tax on the gross payments made to all contractors. The two per cent shall be deducted from every payment made to contractors by contractees and shall be remitted to the Guyana Revenue Authority. The amounts deducted would be allowed as a credit against the final taxes payable by the contractors;
• Restriction of Mortgage Interest Relief to loans up to $15M. This measure will ensure that only low to middle income earners benefit, as was intended. All of these measures will take effect from January 1, 2017.

MEASURES TO SPUR ECONOMIC GROWTH
• A reduction in the Corporation Tax rate, from 30 per cent to 27.5 per cent, for manufacturing and non-commercial companies;
• The introduction of a dual tax-rate for companies carrying out both commercial and non-commercial activities. This means that the noncommercial part of the business will benefit from the lower corporate tax rate of 27.5 per cent but will pay the commercial tax rate of 40 per cent for their commercial operations. Companies must, therefore, engage in segment accounting and keep separate books of accounts to so benefit;
• These two measures will result in a loss of $752M in taxes. However, it is anticipated that this amount being invested in renewal and expansion of businesses;
• The Minimum Tax Rate shall be two per cent of the turnover of a commercial company, or 40 per cent of taxable income, whichever is lower. This will alleviate the higher incidence of tax on those entities which continually have a higher incidence of tax greater than the present commercial rate of 40 per cent. Currently bidders for contracts are required to have valid Income Tax and NIS compliance certificates. This has especially hampered small contractors from participating in the procurement process. While these requirements will remain, Government proposes to make it easier for potential bidders to access these documents as follows:
• Automatic Issuance of Temporary Income Tax and NIS Compliance Certificates. Prospective bidders will be given a one-off, three month, temporary certificate, regardless of their status with GRA and NIS. During the three months, they are expected to make the necessary arrangements to become compliant. Each certificate will cost $1,000;
• Standard Income Tax and NIS Compliance Certificates. These will be valid for one year and will be issued to individuals and companies that are in good standing with these agencies. Each certificate will cost $2,500;
• Trusted Trader Compliance Certificates. These will be valid for three years and will be issued to companies that have a demonstrated track record of compliance. Each certificate will cost $10,000. These measures will take effect from January 1, 2017.

VALUE-ADDED TAX (VAT)
• Reduction in the rate of VAT – Government proposes to reduce the Value Added Tax rate from 16 per cent to 14 per cent;
• Increase in the VAT threshold – Government proposes to increase the VAT threshold from $10M to $15M. It was found that a significant number of persons were unable to maintain proper records to meet the minimum threshold requirement for VAT registration. As such, this measure will allow the GRA to concentrate on the cohort that makes the bulk of VAT payments, since there will be a smaller tax base and consequently less VAT registrants to administer;
• VAT on electricity consumption – Government proposes to introduce a VAT of 14 per cent on electricity consumption in excess of $10,000 per month. For the avoidance of doubt, the $10,000 limit is not an allowance. While VAT will not be applied to consumption up to $10,000, it will be applied to the full amount once consumption exceeds $10,000;
• VAT on water consumption – Government proposes to introduce a VAT of 14 per cent on water consumption in excess of $1,500 per month. For the avoidance of doubt, the $1,500 limit is not an allowance. While VAT will not be applied to consumption up to $1,500, it will be applied to the full amount once consumption exceeds $1,500;
• Exempt and Zero-rated items. Government proposes to expand the list of exempt items and eliminate all zero-rated items, with the exception of those pertaining to exports and manufacturing inputs.

MEASURES TO IMPROVE TAX ADMINISTRATION
• Excise Stamp System – In an effort to minimise the smuggling of high dutiable excise products, GRA will implement, 2017, an “Excise Stamp Programme”, based on an agreement with Canadian Bank Note (CBN). An excise stamp is a type of revenue stamp affixed to excisable goods to indicate that the required excise (and other) taxes have been paid on the product. This will see the stamping of alcohol and tobacco products with “high-security” stamps, which can be read by barcode scanners. The system is highly secure and will be supplemented by a track and trace system, anti-counterfeit measures, barcode scanners, and technical support. The Excise law will be amended suitably to facilitate the implementation of this measure;
• Increase in the three years’ statute of limitations – It is proposed to increase the statute of limitation from three years to five years. This will give the Revenue Authority time to cover a longer period to examine taxpayers’ records, consistent with similar provisions in the Income Tax Act. This will enhance enforcement and compliance efforts;
• Persons leaving Guyana with tax liabilities – It is proposed to revise the provision of Section 45 of the VAT Act by deleting the proviso which allows for a court order to be obtained enforcing this provision. This will be consistent with a similar provision which exists under section 71 of the Income Tax Act Chapter 81:01;
• Extension of time for payment of tax – Section 42 of the VAT Act empowers the Commissioner to extend the time for payment of tax by the person beyond the date on which it is due and payable under this section, or make such other arrangements as appropriate to ensure the payment of the tax due. This provision allows a taxpayer to object to a decision by the Commissioner regarding an arrangement to settle outstanding VAT due. Given that VAT is funds held in trust, no such right should be given to taxpayers regarding payment. Therefore, this provision will be repealed;
• Non-Resident VAT refunds – Non-residents are required to pay VAT and apply for a refund when they are leaving the country. This places a heavy administrative burden on GRA. In any case, not many persons benefit. As such, this provision will be repealed;
• Budget Agencies to pay VAT – Paragraph 2 (x) will be removed from the Schedule I of the VAT Act which says, “goods when imported and works and consultancy services purchased by a budget agency named in the schedule to the Fiscal Management and Accountability Act 2003.” This will result in Budget Agencies paying VAT on all goods and services, except those financed from the proceeds of a donor agency;
• Removal of locally produced items in the VAT Act – A review of the VAT Act confirmed that in 2007, a few zero-rated items had the words “locally produced”. Schedule 1, paragraph 2 of the VAT Act will be amended accordingly;
• Late filing of Income Tax, Corporation tax and Property Tax Returns – The current late filing penalty regime does not provide for penalties to be imposed on late returns which disclose a loss. Taxpayers can submit a loss or deficit return late without fear of any penalties, since penalties are applied to taxes assessed. I propose to increase late filing penalties to 10 per cent (similar to VAT). A flat fee of $50,000 will be applied to each loss/deficit return submitted after the prescribed time;
• Late payment of tax – The penalty for late payment of tax provided for under section 99 (1) of the Income Tax Act Chapter 81:01 will be repealed and a simplified interest regime enacted. Section 6 (1) (c) of the Financial Administration and Audit Act will be amended to facilitate the imposition of interest on late payment of tax at the rate of two per cent per annum (similar to VAT);
• Interest Rate – The relevant section would be amended to provide for a simple interest rate of 18 per cent per annum, instead of the current Bank of Guyana market published rates;
• Failure to keep proper books and records – The penalties for failing to keep proper books and records are lenient. As a result, many taxpayers, particularly the self-employed taxpayers, fail to keep proper books and records. The penalties will be increased to $200,000 or five per cent of the tax assessed, whichever is greater;
• Failure to present books and records when requested – Taxpayers fail to present books, records and other information in a timely manner. Audits are greatly affected by the lack of evidence to justify disclosures in financial statements. It is proposed to increase the fine to $200,000 and/or six months imprisonment;
• Distress Proceedings for non-payment of tax – In an effort to streamline the various tax Acts under the administration of the GRA, legislation currently in place in the VAT Act as regards distress proceedings will be inserted in the Income Tax Act to facilitate like action in cases of non-compliance and nonpayment of Income Tax. This legislation will help to strengthen GRA’s collections and improve compliance by taxpayers;
• Garnishment – The provisions of section 102 of the Income Tax Act Chapter 81:01 will be revised to provide authority to the GRA to garnish funds from bank accounts held by taxpayers who have outstanding tax arrears. This provision would assist to improve compliance with demands issued by the GRA for outstanding payments;
• Increase penalties for offences – The penalty imposed for offenses committed against the Income Tax Act under the provisions of Section 109 to 111 would be increased from $15,000 to $100,000 to force voluntary compliance;
• Non-resident companies failing to keep accounting records in Guyana – Nonresident companies, which fail to keep relevant books and records in Guyana, thereby causing unnecessary delays during audit, will be subject to a fine of $1,000,000;
• Failure to inform the GRA about the commencement of business (Registration) – Many persons commence business but do not inform the GRA about this activity. Many businesses are non-compliant with the law regarding filing of returns, especially at the early stages. The law will be amended to give persons a maximum of three months from the commencement date of business to inform the GRA;
• Cost for TIN – There is currently no fees for the issuance of TIN certificates, even though GRA incurs an administrative cost. It is proposed to impose a fee of $1,000 for the first TIN certificate and $5,000 for reprinting of TIN certificates.

MEASURES TO ENHANCE REVENUE
• Travel Tax – The departure tax payable by persons leaving Guyana has remained unchanged for years. As a result, it is amongst the lowest in the world. Government proposes to increase the travel tax from $2,500 to $3,500. Government wishes to announce, too, that measures will be implemented to enable airlines to collect and remit the tax to the Revenue Authority, thereby making for one less departure line at our airports, and reducing the cost and administrative burden on the GRA while ensuring consistency with international practices in the travel industry;
• Premium Tax on Re-insurance Premiums for Local Aircraft Operators – Based on representations made by the Aircraft Association, the Government has acceded to their request to waive premium taxes charged on insurance premiums payable by aircraft owners and accumulated for the past eight years exceeding. The loss is $80M, but Government believes it will stimulate growth and improve flights to interior locations. It is proposed that the tax will be now payable from January 1, 2017;
• Capital Gains Tax – In moving the property tax valuation to 1/1/2011 as per the Property Tax Act in 2014, the Capital Gains Tax Act was inadvertently left unchanged, thereby allowing for taxation not in keeping with the taxation principles on the calculation of Capital Gains. Government believes that this inadvertence has created an unfair burden on persons selling properties that were revalued. Consequently, Government is proposing a change in the relevant sections of the Capital Gains Tax Act to bring them in line with the Property Tax valuations;
• Fee for Passport – It is proposed to increase the fee for a passport from $4,000 to $6,000. However, persons 65 years and above will be exempt from the payment of the passport fee. This measure takes effect from January 1, 2017;
• Abolishment of Certificate of Compliance to process Transfer of Motor Vehicle Registration – It is proposed to dispense with the requirement for Motor Vehicle Compliance, since this will reduce the duplication of documents submitted to GRA and the processing time for the completion of transfer of registration. At the same time, it is proposed to increase fees for transfer of motor vehicle registration for motor cycle and other vehicles, ranging from $5,000 for motor cycles to $25,000 or two per cent of sale price, whichever is higher;
• Fees for permits and other documents – Government proposes to impose a fee of $2,000 for a Driving Permit issued to drivers residing abroad but visiting the country temporarily, and $2,000 for persons requiring a Letter of Authenticity for verification of drivers’ licences;
• Miscellaneous fees – Many customs fees are over 20 years old and cannot cover the administrative and other costs attached to performing the service. Government proposes to amend Section 275 of the Customs Act, Chapter 82:01 to bring these fees in line with current reality.
• Intoxicating Liquor Licensing Act & Tax Act, Chapter 82:21 – Government propose an increase in fees for Application and Renewal of Intoxicating Liquor Licences. These fees were in existence since 1992; and increase in penalties. Government proposes to amend the legislation to increase the penalties relating to Licences for Spirituous Liquor.

MEASURES IN SUPPORT OF THE ELDERLY
• In addition to benefits granted to the elderly in the previous two budgets, and the removal of the passport fee in this budget, Government has announced an increase in Old Age Pension to $19,000. Since coming to office a mere 18 months ago, the Government has increased this assistance to elderly citizens by 45 per cent. Over 53,000 persons are expected to benefit. At the same time, Public Assistance will increase to $7,500. Both increases are to take effect from January 1, 2017.

MEASURES TO IMPROVE WORKERS’ DISPOSABLE INCOME
• In addition to the substantial increase paid to public servants over the last 18 months, the Government has used other means to increase workers’ disposable income, including raising the income tax threshold by at least 20 per cent, removing the income tax on the workers contribution to NIS and paying a one-off bonus. The Government will continue to engage the unions in negotiations to find common ground to issues pertaining to wage and salary adjustment, de-bunching and allowances, taking into consideration the state of the economy and our desire to maintain macroeconomic stability.