The Guyana Association of Bankers Incorporated (GABI) has signaled its intention to challenge to the “fullest extent” tax assessments from the Guyana Revenue Authority (GRA) which state that institutions across the sector owe approximately $4 billion in corporation taxes.
In an advertisement in yesterday’s edition of the Stabroek News, the GABI objected to statements made by GRA Commissioner General Godfrey Statia and informed that it has “engaged experienced, legal and accounting minds to pursue this matter to the fullest extent on its behalf.”
While the GABI stressed that it has been advised that members have met their tax obligations and is confident that its position is robust and indisputable, Statia had also told this newspaper that he stands by his assessment.
GRA has argued that the manner in which the financial institutions were calculating their “bad debts” for the purpose of a tax write off was not accurate.
“Banks are commercial entities in the business of lending and have bad debts. However, while the financial standards allow banks to make provision for these debts in their accounting, the Corporation Tax Act speaks about bad debt in a different light. We deal with actual bad debt— not because you provide for a bad debt means it will actually be bad,” Statia had explained at a press conference last week and he stressed that “you cannot write off that debt as a provision and expect GRA to accept it.”
The GABI has, however, claimed that commercial banks and non-bank financial institutions have made all taxation payments to the government as required by law.
“Financial statements are prepared, reviewed and finalized in keeping with domestic, regional and international accounting and taxation standards as well as Bank of Guyana regulatory guidelines,” it said before adding that “the approach currently employed by the commercial banks has always been accepted by the relevant authority and this has been well-documented and confirmed by the [GRA].”
Statia also acknowledged that GRA previously accepted the calculations made by the institutions.
“We are contributory negligent because we allowed it to go on for years, so people were of the opinion that they were doing the right thing,” he had said, while reiterating that the law only allows the authority to accept actual bad debt as a write off, once banks can show that sufficient action was taken to recover debt, including whether there was a guarantee for the debt.
The issue was first raised at the Annual General Meeting (AGM) of Banks DIH Limited, whose Chairman, Clifford Reis, noted that on December 20th, 2018, the company received Notices of Assessment from GRA for Citizens Bank, claiming additional corporation taxes of $534,416,000. Statia later said that for the sector as a whole, the sum is closer to $4 billion.
In the case of Citizens Bank, GRA has disallowed the company’s claims for deductions for impairment losses on financial assets in relation to the years of income ended 30th September, 2010 to 2012 and 2014 to 2016 inclusive.
