-Ram warns they will feel squeeze

The cost of production in the mining industry will more than likely increase for small and medium scale miners, Chartered Accountants Christopher Ram said as he explained the implications of the menu of tax measures being imposed by the Government.

Ram made a guest appearance at a specially convened meeting organised by the Guyana Gold and Miners Association (GGDMA) with all miners, operators, jet-men, marack-men, pork-knockers and everyone involved in the mining industry to discussed the pros and cons of Value Added Tax (VAT) on certain goods and services; the increased in tributors tax from 10 per cent to 20 per cent; the payment of two per cent tax and the filing of income taxes.
Additionally, the meeting sought to address the need to keep proper books and daily records of all transactions, and the punitive measures for failing to do so.

From the inception of the meeting, which saw an overflowing of miners from the halls to the compound of the association’s North Road Bourda Head Office, the Executive Secretary Tony Shields made it clear that, though miners are not against paying taxes, the Government never consulted with GGDMA on the measures being imposed as he spoke in the presence of the President Terrence Adams and Vice President Andron Alphonso.

In his opening remarks, Ram told the miners, who were clearly anxious to have clarity on measures that both the Finance Minister Winston Jordan and the Minister of Natural Resources have taken stock of the invaluable contributions made by small and medium scale miners.

In addressing the first issue surrounding the two per cent final tax, which was introduced as law in 1988, Ram explained that as of January 1, 2017, the two per cent is no longer a final tax to be paid by miners on their operations, but a tax on the payment of account.
“So you now have to account for your total income and then treat that two per cent as part of the taxes you have paid in advance,” he further explained.
The Chartered Accountant noted that this particular measure will only affect the individual miners and not the mining companies since they are already paying corporation taxes.
It was further explained that once the two per cent is more than the taxes required, then miners will be refunded by the Guyana Revenue Authority (GRA). “If you owe more you have to pay more, if you over pay…you will be refunded,” he told the miners.

In his opinion, the Revenue Authority would have to refund many miners for overpaying taxes but noted that the GRA is not the fastest entity in terms of offering refund.
Raymond Khan, one of the many miners present, suggested that two per cent tax be increased to maybe three per cent but that should be the final tax.

WELL RECEIVED
This proposal was well received by the miners, who said it will aid in reducing some of the complication and financial burdens faced by miners.
However, at this level, it is just a proposal and must be consulted on before being put to the GRA and the Government by extension.
Ram said another issue that will face miners and one which requires greater clarity from GRA, is whether they will have to pay their quarterly installment, in addition to the two per cent tax being paid.

“If you don’t pay those installments on time, you will have to pay penalties, and a penalty is a tax,” he said. He lamented that GGDMA must raise this issue with the Revenue Authority.
Turning his attention to VAT, the Chartered Accountant said significant changes have been made to the tax regime with respect to VAT; however, these changes will only come into effect on February 1.
“Many of the items that you might be familiar with in terms of stocking up to go into the mining district might have been zero-rated because they are basic food items. All those basic food items, practically every basic food item has now being shifted from zero rates to exempt,” he noted.

As a result, the input tax paid to produce a given food product will not be refunded to the producer as in the case of zero-rated items but will now be carried by the producer, and would likely be passed unto the consumer.
“Assuming the system works as it should then there is likely to be some element of additional cost in the operations. It could also mean that you as miners, raw gold is exempted, so your output is exempt, so any VAT you suffer you will have to bear it as a cost,” he explained.

But this announcement did not sit well with the miners present, who openly expressed concern not only about the cost of food items but there truck drivers will now increase the cost to transport fuel because of the trickling effect.
Additionally, the Chartered Accountant urged the miners to maintain proper records of their mining activities while underscoring the importance of submitting their Tax Returns on time.
He noted that in past there was no penalty attached to late returns which disclose losses. “What will now happen is that there is going to be a flat fee of $50, 000 to each loss…”
Additionally, Ram noted that there will be a fine of $200, 000 or six months imprisonment for the failure to present books and records when requested.

“What you have to be careful with is not keeping proper books and record because what happens when you don’t is that you give the Commissioner the right and the power to give a best of judgment assessment,” he said, noting that such assessment may not be in favour of such miners.
This issue had generated significant concerns from miners, who noted that given the nature of the job, GRA must clearly state what “proper record” is and whether the Revenue Authority will be willing to accept the records being kept by miners.

The Vice President noted that the mining districts do not at always allow for proper record keeping, noting that there are often emergency situations such as floods which force miners to relocate. Additionally, he questioned whether GRA would receive the receipts provided by service providers.
The miners then inquired what makes up a legitimate “receipt?” A receipt provided for scrutiny by the Chartered Accountant revealed that it firstly lacked a revenue stamp, and as such, would not be accepted by GRA.
It therefore means that for bills declined by GRA, miners would have to carry that financial burden.