The Tax (Amendment) Bill 2008 was on Thursday passed by Parliament removing the Stamp Duty payable upon incorporation or increased capitalization.
The Bill effectively repealed Section 16 of the Tax Act Cap 80:01 which provided as follows: that a company incorporating in Guyana shall pay on the date of incorporation a duty of one half of one percent of its nominal capital and on increasing its nominal capital shall pay a like duty within fifteen days of registering the increase.
Minister of Finance Ashni Singh in his presentation in the National Assembly said that with the passage of time this provision has proved a disincentive for companies for incorporation and moreover a deterrent to increasing equity or share capital. Singh recollected that the repeal of Section 16 of the Principal Act was announced earlier in this year’s Budget. He added that the repeal has to be situated in the context of several other measures to encourage company registration in Guyana.
Singh noted that companies are required to pay certain fees that are articulated in the regulation made under the Companies Act and as suggested in the Budget and consistent with this repeal he has signed and had published in the Gazette an amendment to the Companies Act regulation that would similarly eliminate the variable component.
PNCR-1G MP Winston Murray offered the party’s support for the Bill “unconditionally.” Murray stated that “any measure which seeks to cheapen the cost of doing business by a new company incorporating itself is to be welcomed.”
Murray said, however, that he did not share the Minister’s view that this cost of half a percent of the share capital is really onerous. Murray said that with regard to a $9M company, it would amount to $45,000. Murray continued that in the thrust of making businesses truly competitive, there is the need for a comprehensive revisiting of the taxation structure for businesses. “We have been arguing for some time in this National Assembly, that the corporate tax rate should be reduced.” The PNCR-1G MP made the point that Guyana must ensure that its corporate tax is competitive with other Caribbean territories.
He said that with the windfall that has accrued from the implementation of VAT, which he said the Minister has shown no inclination to reduce but has shown a disposition to spend freely in other sectors in accordance with what is determined to be priority, sight must not lost of this particular area because while it is an attractive political proposition in the short term to do a number of social-type projects many of which he agreed are useful, “at the end of the day, it is the generation of economic growth that will ensure on a permanent basis we can increase the standard of living of our people and their general overall well-being.” He added that anything that could be done to use this windfall by way of revisiting the corporate tax structure would be helpful.
Nevertheless, he posited, the repeal Bill was probably a “small drop” but not to be overestimated. AFC Parliamentarian Sheila Holder in an invited comment to Stabroek News posited that the repeal bill in the thrust for creating an investor friendly climate was not very significant.
She further recollected that the IMF had indeed recommended bringing Guyana’s corporate tax regime in line with other Caricom territories.
