Revenue uncollected due to exemptions from duties and taxes in the year 2018 was more than double the amount exempted in 2017 with companies and businesses ‘Conditional Tax Exemption’ equal to 20 times that of the taxes paid.
According to the 2018 Auditor General’s report a total of $134.236 billion in exemptions was granted for the period under review, as compared to $64.312 billion in 2017. The report said that the Guyana Revenue Authority (GRA) has explained that this change is due to Agreements between businesses and the Government of Guyana which contributed to a large sum of tax exemptions being granted as well as major increases in imports by the Oil and Gas Sector.
In fact the sum forfeited was nearly half, 43.42%, the actual revenue collected over the same period, with the majority of exemptions being granted to companies and businesses.
These businesses, according to the Audit Office, were given exemptions equivalent to $104.763 billion of the total conditional exemptions granted. The Audit Office was however unable to ascertain the total value of tax exemptions granted in respect of Investment Agreements facilitated through the Guyana Office for Investment (GO-Invest) and the Guyana Geology & Mines Commission (GGMC).
Notably an analytical review of the total tax exemption granted for the past three years has shown a decrease in the number of exemptions granted from 2015 to 2016 but an increase of 37.52% and 43.42%, respectively for 2017 and 2018.
In addition, an analytical review of the tax exempted and the taxes paid showed that a mere $5.342 billion in taxes were paid by those granted ‘Conditional Tax Exemption’. For this sum the GRA forfeited $116.267 billion.
“Notably, luxurious and modern motor vehicles attracted great tax exemption of which no payment of taxes were required. The vehicles that are noted do not relate to re-migrants but other categories of tax exemptions granted in 2018,” the report states.
In relation to exemptions granted to investors the Auditor General has explained that records obtained from GO-Invest and GGMC show that 37 and 12 incentives were granted respectively.
Of the 37 incentives granted by GO-Invest, only seven were processed, one was denied and one was cancelled by the Authority. The total taxes exempted for the seven incentives processed were $87.962M, which is 0.8% of the total tax exempted under the category Companies/ Businesses. Meanwhile of the 12 incentives granted by GGMC, only one was processed by the Authority of which total tax exempted for the year was zero.
In response the Commissioner General of the GRA has indicated that his agency was in receipt of 37 Investment Agree-ments from GO-Invest in 2018 however, only 33 were approved that met all the requirements whilst the difference of four was approved in 2019. For GGMC, GRA was in receipt of 11 applications for Tax Exemptions however, nine were approved in 2018 whilst two were approved in 2019.
“It must be noted that one application was not submitted to GRA since the item is ineligible for tax exemption,” he explained.
