President Bharrat Jagdeo has staunchly defended the granting of concessions and tax holidays to Queens Atlantic Investment Inc (QAII) and says antibiotics and textile ventures being invested in are truly pioneering, since no other company in the country is engaged in these industries.
Jagdeo was speaking yesterday at a press conference held at the Office of the President where he spoke about a number of topical national issues.
He said that the Ministry of Finance through a statement had pointed out that there were several deficiencies in the laws, limiting it to granting concessions to only a few sectors. This, the Government is seeking to fix through a series of amendments to come.
The Ministry’s statement had said: “On closer examination, the current Fiscal Enactments (Amendment) Act 2003 does not reflect Government’s intent when the said Bill was laid in Parliament. In this respect, Government will be moving to amend the law to clearly provide for all pioneering projects, infrastructure projects, and correct the list of regions eligible for tax holidays.”
The statement said too that it has always been, and continues to be, Government’s intention to “treat with pioneer industries that create employment regardless of location, and large investments in identified regions regardless of the sector of investment.” The statement pointed out that the current articulation in the law is not exhaustive with respect to the policy areas that the Government is seeking to encourage investment and employment via tax holidays
It said too that the current wording in the law does not provide for tax holidays for infrastructure projects like the Berbice Bridge – tax concessions for which had to be provided for via special legislation, and Amaila Falls Hydro project.
Stabroek News columnist Christopher Ram in his Business Page column had however pointed out that the President was incorrect as the Income Tax (In Aid of Industry) Act described pioneering industries as non-traditional agro-processing, information and communications technology, petroleum exploration, mineral exploration and tourist hotels but not textiles and antibiotics.
The President yesterday said the Minister of Finance is to determine when the amendments will be brought before the National Assembly.
He said too that the list of regions in the legislation as eligible locations for investment concessions is incomplete. He said that the omissions resulted from a rush to pass the laws.
“The Select Committee did not see that there were several omissions …Pioneer-ing industries were always eligible for tax holidays,” Jagdeo said.
The President explained that two conditions qualify an investment for tax holidays. The first is that it must be pioneering – having not been in the country before, and second, it must be in one of the locations eligible for such concessions.
He said that after the first investment to qualify as pioneering, other investments of a similar nature will not benefit from the tax holidays.
“We have to amend the tax laws to include several other sectors…it is not just for QAII, it is for infrastructure projects, like the [Amaila Falls] hydro-electric project, but the laws don’t provide for that now,” Jagdeo said.
Jagdeo said that it would create an unfair disadvantage to companies who have to compete against investment which have a corresponding advantage because of the tax concessions.
The President pointed out that only two of five QAII companies are being given tax holidays. He said that it is for this reason that the Government ensured that QAII broke its ventures into separate companies so that they all wouldn’t benefit from the tax holidays. He said that the QAII-owned Guyana Times newspaper will not be benefiting from any form of concessions, neither would the manufacturing or printing operations.
The President had at the launching of the Guyana Times on June 5 asked Head of the Privatisation Unit Winston Brassington to hold a seminar on the tax laws as they related to investment and privatisation. This tax seminar will be held on July 9.
President Jagdeo had berated private sector businessman Yesu Persaud at the launching of the Guyana Times for asking that the tax concessions granted to the investors be accorded to others. The President said that Persaud’s comment had exposed his ignorance of the tax laws.
