Noting that professionals such as lawyers fall into the hard-to-tax group, the Guyana Revenue Authority (GRA) has begun training its officers in the Presumptive Method of Taxation which allows them to determine the income of certain self-employed individuals.
Commissioner General of the GRA, Godfrey Statia explained that while such a method is relatively new to Guyana it has been employed elsewhere in the world with great effect, notably in countries like Israel and France.
“Section 29A of the Income Tax Act allows for such methods,” Statia told Stabroek News on Thursday. He explain-ed that the GRA is therefore imploring all taxpayers be they professionals or other self-employed persons, to file true and correct tax returns failing which the appropriate penalties and interest, and in appropriate cases – jail terms will be levelled against them by the Authority under the relevant sections of the Tax Laws.
He explained that these professionals have for some time been on the radar of the Authority which is prepared to work to ensure they comply with regulations.
Statia had served notice of his intention to use the presumptive tax method to address elusive professionals at a December 2016 press conference.
“That has been a problem that the GRA has faced for a lengthy period of time. In most countries where there are professionals, they use what is called presumptive taxation where you are going to look at like trades and decide that you will tax them according to the trade they are in”, he said then.
Further, he added, “You also could use different measures and that is where (the) tax return comes in because it will tell you what was earned…We are putting things in place to actually do that next year to pull these professionals that have been evading tax to ensure they pay their rightful share in taxes. It is not rocket science to get them to pay it is the will and the resources I am sure that we did not have. Now we have the will we are looking for the resources to expect a change in approach for 2017”.
Statia’s declaration on Thursday comes days after former President of the Guyana Bar Association, Christopher Ram accused lawyers of spending the last fourteen years blocking statutory provisions such as the Fiscal Enactments Amendment (No. 2) Act of 2003, aimed at bringing them more securely into the tax net.
In a letter in Stabroek News headlined `The lawyers have put their profession into cold storage’ and published on May 31, Ram said that “professionals in Guyana, including accountants and doctors, seem to have an allergy to paying taxes.”
“The stories of tax evasion by some lawyers would be comical if the matter did not involve criminal conduct,” he maintained, adding that it has in the past appeared that there was a class bias in tax administration that treated the small business person and the employee less favourably than professionals.
“There should be no discrimination in tax administration and it would be a great day when the annual reports of the Revenue Authority start disclosing statistical information on the tax contribution of various categories of taxpayers,” Ram proclaimed.
A tax reform report which this government had commissioned had also come down in favour of application of the presumptive tax.
The report recommended last year the implementation of Section 28A of the Income Tax Act 81:01 as soon as the GRA has the required expertise and resources to ensure a fair and broad system of presumptive taxation for the most difficult categories. The report noted that Section 28A (I) of the Income Tax Act mandates that the presumptive tax shall only apply to persons with turnover less than $10 million annually. The report said that applying this section to hard-to-tax individuals will require an amendment of the law.
