According to the Guyana Revenue Authority (GRA) businesses have used the 2% reduction in VAT to increase their profit margins rather than passing on the intended benefit to the consumers.
A press statement from the agency explained that it has observed that notwithstanding the reduction in the VAT rate from 16% to 14% there has not been any incremental reduction in the prices of standard rated goods and services as intended by the 2017 budget measures.
GRA has advised that businesses take corrective actions and informed that enforcement officers will be dispatched to ensure compliance with the law.
“Consumers are also being urged to assist in being vigilant and report entities that fail to adhere to the changes in the prices of goods and services,” the statement said.
The reduction in the VAT rate came into effect on February 1, 2017 following amendments to the Value Added Tax Regulations 2016. These amendments also provide for an increase in the VAT registration threshold from $10,000,000 to $15,000,000 annually making it mandatory for businesses to register for VAT if their annual sales are equivalent to or exceed the threshold.
In announcing the rate reduction during the presentation of the 2017 budget, Minister of Finance Winston Jordan noted that it was one of several changes to the VAT regime that were in keeping with the coalition government’s manifesto promise as well as several recommendations of the Tax Reform Committee and a Caribbean Regional Technical Assistance Centre study.
