The Guyana Revenue Authority (GRA) continues to face difficulty in getting self-employed persons, and corporations to submit tax returns, according to the latest Auditor General’s report.
Auditor General Deodat Sharma, in his 2015 report, said that almost 85% of active registered self-employed persons had not filed tax returns last year.
“As of December 31, 2015 there were 126,669 registered self-employed persons. Of this number, 93,157 were identified as active however only 14,164 filed a total of 34,644 returns resulting in collections totalling $3.407 billion. Therefore, 78,993 self-employed persons did not file their tax returns,” the report states, while adding that in 2014 a similar situation obtained as of 85,753 active self-employed persons only 37,252 returns were filed.
While the Audit Office has recommended that GRA pursue all possible avenues to maximise revenue collections, the Internal Revenue Department has said it continues to issue demands to defaulting taxpayers, with 17,605 demands having been issued in 2015, compared with 19,296 in 2014.
The department has also noted that these demand notices are being issued based on a “risk management approach,” which prioritises the “high risk taxpayers with great revenue implications.”
Similar concerns were also raised in relation to corporations, as during 2015 only 786 tax returns were submitted from the pool of 2,955 active companies.
While the department has claimed that 1,493 demand notices were issued to defaulting companies, the Audit Office was unable to verify this as the Companies Tax Returns Register was not produced for audit.
In the case of the companies, GRA has also been issuing demand notices by assigning priority to those with great revenue implications. It was also noted that legal action has been instituted against chronic non-filers.
The Audit Office, however, recommended that GRA take legal action against all companies which failed to submit annual returns, as is required by law.
In his presentation of the 2016 national budget in January, Finance Minister Winston Jordan said government would be moving to amend the tax laws to ensure greater compliance, particularly among the self-employed, from whom it said revenue collections were lagging.
Towards this end, Jordan said the Tax Act would be amended to ensure that prior to the issuance of all licences for public use, including licences to conduct forms of trade and business, the applicant has complied with his/her obligations to file annual returns has paid, or has made arrangements to pay, all taxes due and payable. An amendment was subsequently passed and assented to.
Also proposed was an amendment to the Customs Act to provide for the non-granting of exemptions to an applicant “unless all outstanding tax returns are filed in accordance with the Income Tax Act, and all taxes have been paid or satisfactory arrangements have been made to pay such taxes.”
During his presentation, Jordan noted that there continues to be “low compliance” by the self-employed, which he said is the reason why the category lags behind other areas of income tax collection.
“What we have noticed though is that our tax structure yields uneven amounts of revenue. The numbers suggest that there is a large population of delinquent taxpayers out there, prominent among whom are the self-employed and persons paying Tributors’ tax. We are concerned about the failure of both categories to pay their fair share of taxes,” he said, while noting that a simple analysis of tax collections has shown that only three parts of the tax structure are contributing meaningfully to government revenues: income tax, production and consumption taxes, and import duties.
GRA defines a self-employed person as any person who works for him/herself and is responsible for setting charges for goods or services offered. Examples of the self-employed include doctors, lawyers, beauticians, barbers, taxi-drivers, minibus owners and operators, farmers, hucksters and shopkeepers.
