The Guyana Revenue Authority (GRA) is reporting that for the first quarter of 2017 earnings from the Value Added Tax (VAT) are at least 10% less than for the same period last year.
While Commissioner General Godfrey Statia has equated this decrease to the reduction in the rate of VAT from 16% to 14%, Chairman of the Board Rawle Lucas has reminded that VAT revenue is directly linked to expenditure and any analysis of VAT revenue must take into account the level of spending and the level of imports. VAT has been pivotal to tax earnings.
At a press conference yesterday, Statia was asked to state how much was earned by VAT in the first quarter and provide a comparison to the same period last year.
“I’m not in a position to state a sum but VAT revenues are down at least 10% both on the domestic side and the import side,” Statia said.
He explained that simply because of the reduction in rate and the rise in the registration threshold VAT revenue would’ve been expected to reduce by 12.5 % but the moving of certain things to standard rated and moving from zero rated to exempt saw expectations moving towards a leveling of the process.
He maintained that this leveling has not yet been achieved because it is early in the year instead a downward trend has been observed.
In February the Ministry of Finance had reported that $3.7 billion in VAT was collected in January, 2017, an increase of 12.3 percent over 2016 a growth attributed to the value of imports.
Meanwhile, in May, the Guyana Shipping Associa-tion revealed that it had recorded a 12% decrease in container traffic for the first quarter of 2017 compared to the same period in 2016. Chairman of the Private Sector Commission (PSC) Eddie Boyer credited the low availability of foreign exchange during this period as being partially responsible for the decline.
At yesterday’s press conference Statia also revealed that even though the VAT rate has been reduced by 2% businesses are still charging customers the same price; an issue which the GRA intends to begin addressing.
“Most companies have set out a selling price …[with the reduction in VAT] their profits margins are going up and the customer is not getting the relief so we have sent out inspectors. In January of this year we checked and then we went back and the prices have remained the same,” Statia said noting that the GRA will be working to educate the customer so that they can be vigilant.
He also noted that his investigators are working to ensure that all businesses eligible to pay VAT are registered to do so.
He noted that investigation of businesses operating in the Robb and Regent streets area alone has seen close to 80 businesses being registered.
Statia had previously explained to Stabroek News that the deployment of a special enforcement team which utilized third party information, decoy buyers, importation documents, GRA’s database and visits to the businesses led to the identification of those businesses which were operating outside of the law. He explained that the exercise was ongoing even as those businesses already identified have had fines and penalties impos-ed for past violations.
Asked to explain any trends his officers would have noticed in the businesses identified, Statia noted only that they particularly operate in the Robb and Regent streets area.
“I do not have to tell you the nationality of those persons,” he said adding that the GRA was actually receiving a lot of information from the business community.
“Those paying their VAT are calling us and giving us the information about those who are not compliant and this is the type of stakeholder co-operation we are looking for,” he said.
