While some businesses are on track with filing their Value Added Tax (VAT) returns, which the Guyana Revenue Authority (GRA) will begin accepting from today, others are still unsure about what needs to be done and will have to hire staff to complete this task.
The VAT returns become due in 15 working days: on February 21, after which date businesses must pay $1,000 per day for each day late or 10% of the tax payable for the period, whichever penalty is greater. And if the GRA extends the deadline, failure to meet the new deadline will see a fine of $2,000 per day and three months imprisonment.
Stabroek News spoke to several businesspersons yesterday to determine their state of readiness.
At Jacs Hotel, Restaurant, Snackette and Bar, Proprietor Stan Smith said he will be showing his staff what is required to file the VAT return.
Smith said that in his bakery all the taxable items are cashed at one register and at the end of the day he subtracts 16% of the final sales from that register, as the output VAT for those items. And for the restaurant, the VAT amount is stated separately on the bill and this is computed daily.
Smith said prices across his bakery remain the same and are VAT inclusive, except for one or two items. He remarked that he has taken a reduction on his profit but maintains he will not suffer a loss since flour is cheaper. Consumption Tax is no longer included in the price of flour and VAT is charged separately. In Smith’s view there is no reason why bakeries should increase their prices.
President of the Linden Chamber of Commerce and Industry Basil Jaipaul said he had received his VAT return package from the GRA but there was no VAT return form enclosed.
Jaipaul said he “will have to hire an accountant,” to conduct monthly reports, instead of the one year-end report. His business, the Riverview Shopping Centre at Wismar, he said, will also have to become computerized to ease the accounting burden, and this will come at an extra cost to the business.
The GRA is encouraging businesses to visit its office to uplift forms if they were not received. It will also be holding outreach exercises regionally leading up to the filing of the VAT return.
Like many other businesses across the country, Riverview Shopping Centre has seen a decrease in sales. “Sales have dropped tremendously,” Jaipaul said. And since Linden is a depressed community it does not help the situation, he added. “I don’t know where these poor people gonna get the money to buy,” he said.
It was explained that some items that were previously taxed at 10%, were now taxed at 16% and others that attracted no taxes increased to 16%. It was noted that it is difficult for consumers to see the benefits under these circumstances.
Gerry Gouveia, president of the Georgetown Chamber of Commerce and Industry (GCCI) told Stabroek News his company hired one additional accountant and the accounting staff was being prepared to deal with the VAT return process.
He also remarked that the recent additional zero-rating list by the Finance Ministry is very welcome, since it will bring some relief to consumers. The GCCI, he said, will continue to work with the Finance Ministry to ensure that VAT is implemented in a way that will not bring hardship to the consumer. It is the Chamber president’s view the GRA’s public relations campaign is still demonizing the business community and he says that this should not be.
Norman Semple, president of the Berbice Chamber of Commerce and Development Association said his business had not yet received a VAT return package form the GRA.
He said the business’s accountant will do its accounts and since its main service falls under ‘medical services’ the prices have remained the same. Stabroek News pointed out to Semple that although he deals mainly in zero-rated supplies the GRA still requires him to file a VAT return. The chamber president replied that when the GRA informs him that he is required to file a VAT return he will do so.
Businesses selling zero-rated items are required to register and are also required to file a VAT return. The GRA, at a seminar on Tuesday at the Regency Suites on Hadfield Street, reminded registered businesses that even if there are no taxable activities during the tax period they are still required to file a VAT return. Zero-rated businesses may have also paid VAT during the tax period and they are eligible to reclaim the VAT paid. For example, stores selling mainly medical supplies will be paying VAT on items like vitamins and food supplements, if these items are sold at the outlet.
At Barrows Hardware Store in Mackenzie Dunstan Barrow also confirmed that they have received their package and will be preparing their accounts with the accounting staff on hand.
It will also cost businesses quite a sum if they fail to file their VAT return forms on time. The VAT Act stipulates under Section 82, that if a payment is owed to the GRA for the tax period, failure to make this payment incurs 2% interest charges, while the GRA pays 1% if the Authority owes you.
