Dear Editor,
With reference to a letter in the Wednesday May 13, 2009 edition of Stabroek News entitled ‘Why is VAT payable on land which will be used for a primary residence?’ Commissioner-General of the Guyana Revenue Authority (GRA) Mr Khurshid Sattaur wishes to reiterate that not all land for a primary residence attracts Value Added Tax (VAT).
The GRA prepared and published its policy (VAT Policy 34) on the rental and sale of land and buildings during the latter half of last year, which explains how VAT applies to land for private use and business purposes.
Schedule II, paragraph 2 (d) of the Value-Added Tax Act exempts a supply of-accommodation in a residential dwelling; or leasehold land by way of lease (not being a grant or sale of the lease of that land) to the extent that the subject land is used or is to be used for the principal purpose of accommodation in a residential dwelling erected or to be erected on that land.
Therefore, rent paid on housing for the purpose of a private dwelling is exempt from VAT. However, the rental of a building to operate a business attracts VAT at the standard rate of sixteen per cent, provided that the landlord or landlady is registered to charge VAT.
Further, the leasing or sale of leasehold land to construct a house for a private dwelling does not attract VAT.
On the other hand, when acquired for business purposes, the sale of leasehold land, the sale of the lease or the rights to the leasehold land and the leasing of land or building will attract VAT at the standard rate of sixteen per cent.
It should be noted that the sale of houses constructed and sold as private residences by registered businesses attracts VAT at the standard rate of sixteen per cent. In addition, businesses which are registered for VAT and are involved in the continuous supply of the sale of land as part of a taxable activity (a supply of land), such as real estate companies are required to charge VAT at the standard rate. Further, the sale of land by the Ministry of Housing, which is a budgetary agency, is exempt and will not attract VAT by virtue of Schedule 11, paragraph 2(f) of the VAT Act, which provides for the exemption of sales by budgetary agencies.
The GRA is urging persons to seek the services of its Tax Advisory Unit when they have queries with respect to VAT or any other tax, by writing to the Head, Communication and Tax Advisory Services Division, 210’E’ Albert and Charlotte Streets, Bourda or calling telephone numbers 227-7672, 227-7867 extension 241or 258, or visiting the office for clarification.
Yours faithfully,
Rovin Stanley
Manager (ag)
Public Relations Unit
Guyana Revenue
Authority
