Local seafood exporters are expected be refunded Value Added Tax (VAT) applied on zero-rated exports following a court case filed by Pritipaul Singh Investments (PSI) which subsequently reached a settlement with the Guyana Revenue Authority (GRA) that will see the company being refunded $246.4 million for 2017.
PSI took the GRA to court last October after it said that the tax agency unlawfully disallowed its claims for VAT refunds. In December, the parties agreed to settle the matter and last month, the GRA agreed to pay the $246.4 million on or before February 14.
Stabroek News understands that the GRA has also written to other seafood exporters informing that based on its re-examination of their respective cases, they would also be entitled to refunds.
According to court documents seen by Stabroek News, the issue arose following an amendment to the VAT Act in 2017. PSI’s Company Secretary Vishnu Panday, in an affidavit, noted that the company is engaged in the harvesting, processing and export of shrimp and other seafood, including fish, sea bob and prawns. He said that PSI is required to charge VAT on its exports at the rate of zero per cent and is also permitted to reclaim any input VAT earned on those exports. Accordingly, he said, PSI had been making its application for the refund of its input VAT and collecting same from the GRA without incident for the ten years prior to 2017.
However, following the 2017 amendment to the VAT Act making some products no longer zero-rated but rather exempted from VAT, the issue arose. Panday noted that products exported out of Guyana were not included on the exempt list but the GRA claimed that it was and advised the company that input tax could not be claimed. He said that the GRA disallowed accumulated claims for VAT refunds by PSI for the period February 2017 to December 2017 which amounted to $246.4 million.
After its efforts to resolve the matter with the tax agency were unsuccessful, the company filed suit in the High Court in October last year. It was represented by attorney Christopher Ram.
PSI sought a declaration that its export of shrimp, fish and other seafood are zero-rated, pursuant to section 17 and paragraph 2(c) of Schedule I of the Value Added Tax Act Chapter 81:05. It also sought a declaration that input tax borne by the Applicant is creditable against the output tax charged on exports at the rate of zero per cent, pursuant to section 24 of the VAT Act. Further, it sought a declaration that the Applicant is entitled to a full refund of accumulated VAT credits in the sum of $246,394,227 for the period February 2017 to December 2017, pursuant to section 35(5) of the VAT Act.
It also sought an order that the GRA pay PSI the sum of $246,394,227 representing the full amount of accumulated VAT credits for the period February 2017 to December 2017.
It also asked for a rate of one per cent simple interest per month to be applied from the due date to the date of payment as well as costs and any other orders that the court may deem just.
On December 12 last year, the parties agreed to settle the matter.
Ram and the GRA, led by the Com-missioner General Godfrey Statia, held discussions and it was agreed that based on the Minister of Finance’s budget speeches and the Commissioner General’s undertaking that changes in the law were intended to improve efficiency in the administration of the law, that the GRA would be willing to relook at whether the input VAT for exports was refundable, and not only in the case of PSI but in relation to all companies so affected. To this end, the GRA requested information from the other exporters in the industry to arrive at the total amount that may be refundable.
