— all outstanding monies will be retrieved, says Commissioner-General

GOVERNMENT’S decision to implement a 14 per cent Value Added Tax (VAT) on tuition charged by private institutions has now resulted in the Guyana Revenue Authority (GRA) committing to ramping up its efforts to retrieve outstanding taxes from non-compliant private institutions across the country.

Speaking at a press conference on Thursday, GRA Commissioner-General Godfey Statia told reporters that efforts are ongoing to retrieve all outstanding monies from tax delinquent private schools.

A 14 per cent VAT has been imposed on private tuition as of February 1, 2017.
He said the revenue entity will be sending out notices to the defaulters with the hope that those persons make payments for the past seven years and the current year.

The GRA boss said some schools have not been compliant since 2012,while others have simply not registered with their entities. Additionally, Statia noted that those schools that have been registered as non-profit entities are mistakenly under the impression that they need not file returns for the entity.

If the schools registered as non-profit entities fail to submit their returns to the GRA, then under law they can lose that status.

“… they can be withdrawn if no filings are done,” said Statia, who noted too that there are also a high-level of non-compliance in the areas of deductions and payment of Pay as You Earn (PAYE) from their employees, as well as their submissions of their employer’s returns.

UNDER-DECLARATION

There are also instances where there is the under-declaration of income and inflated expenditure, and in some instances payments are made to individuals other than the institutions to facilitate the under-declaration.

Additionally, the GRA said there is a high-level of non- compliance in the timely submission of Income, Property and Corporation returns and the payment of taxes of these institutions. Moreover, it was discovered that many teachers are being treated as contract employees and employers are not deducting PAYE and NIS from their salaries.

It was disclosed at the press conference held in the Ministry of Finance’s boardroom that of the total number of private schools operating in Guyana, 57 per cent are currently registered with the GRA.

A DOZEN REGISTERED
Of that amount, 20 per cent of those schools are recognised by the Ministry of Education. Guyana Chronicle reported in its March 2 edition that of the 33 private schools in Georgetown, only 12 are registered with the Ministry of Education.

Statistics revealed by the GRA on Thursday show that 10 per cent of the very institutions are registered as non-profit organisations, while another 14 per cent are registered as profit making organisations.

Some 26 per cent of the institutions have been registered for and are already applying the VAT for some of their services and the sale of zero-rated items.

“Both categories of registrants provide educational services at competitive rates, and the tuition fees range between $144,000 and $300,000 depending on the grade level of the student,” the GRA stated, and according to Finance Minister Winston Jordan, the fees charged by the schools exceed those charged by the University of Guyana (UG) in most cases.

As a result of the foregoing, it is the view of both the Government and the revenue authority that private educational institutions can absorb the VAT imposed on private tuition without passing it on to students.

Before the passage of the 2017 budget, educational services enjoyed a zero-rated status which allowed the registered institutions to receive VAT refunds to the tune of $150M. Those taxes which were refunded were already charged to the users of the services and this allowed the schools to benefit,as the refunds were not passed on to the students in reduced fees.

Having being exempted now, it means that the private institutions can purchase the very educational items at a reduced cost, a benefit which the finance minister hopes would be passed on to students.

‘AGONISING ISSUE’
Meanwhile, the Finance Minister said that the implementation of VAT on tuition of private institutions is part of his administration’s initiatives to broaden the revenue base, a move he described as an “agonising issue”.

“I do not want a link seen between the imposition of the 14 per cent on private tuition and the recalcitrance of schools, as it relates to paying or filing the Income Tax. I said the context, within which the 14 per cent was added to private tuition, should be recognised and is the broadening of the tax base, reduction of taxes.”

He explained that approximately eight of the private schools registered with GRA have an income of in excess of $2B annually and sought to dispel suggestions that public schools are bad while private schools are good.

He made it clear that the public school system is not where it ought to be,but noted in the same vain that every attempt is being made to improve the public education system while referencing Government’s budget of $42.1B for that sector.

The Finance Minister has long made it clear that parents send their students to private institutions because they have a choice, and noted that “you can’t say Government is circumscribing your choice to put VAT on tuition”.

As such, he suggested that the private institutions can isolate those children who are considered to be “poor” and absorb the VAT charge in full or in part. The Finance Minister suggested that in absorbing, the private schools can show it is a tax deductible.

“… it is a win-win for everybody… I really do think that one solution is to go the route of GTT and CJIA, isolate those who can’t afford it and call a meeting (with parents and school) and discuss what percentage the school can bear and what parents can bear.”

The minister said the implementation of the tax was “carefully thought out” and its removal would prove catastrophic and would mean that Government would have to “upturn our economic programme”.

He said too that removing the 14 per cent VAT on tuition would mean that Government would lose some $350M this year given that the 2017 budget has not been fully financed.
As it is, Guyana will be borrowing $38B to finance the budget.

“This Government has said that our mission is to reduce taxes; we have started this year and will keep all the taxes under review. Give this and the other taxes a chance to crystalise,” Jordan urged.