VAT zero rated list out
By Mark Ramotar
Guyana Chronicle
November 29, 2006
FINANCE Minister Dr. Ashni Singh yesterday announced the list of items that would be zero-rated for the Value Added Tax (VAT) due to be implemented from January 1 next.
It includes basic food items such as:
** Bread
** Rice
** Sugar
** Cooking Oil
** Milk
** Baby Formula
** Split Peas
** Onion
** Garlic
** Potatoes
** Fruits (except apples, grapes, dates, prunes, peaches, plums and strawberries)
** Vegetables (except olives, carrots, black eye peas, pigeon peas, chick peas, garbanzos, radishes, broccoli and cauliflower).
At a press conference at the NCN studios in Georgetown, Singh said it also covers:
(1) Medical services and prescription and over the counter drugs
(2) Education services and materials – including books
(3) Electricity
(4) Water and sewerage services
(5) Locally produced building materials for construction such as sand, stone and lumber
(6) Vehicles for public officers/officials and re-migrants
(7) Vehicles four years and older
(8) Computers
(9) Sports gear (subject to the requirements under the first schedule of the Customs Act)
(10) Small gift parcels
The Finance Minister also announced that kerosene, gasolene, diesel and liquid propane gas will be exempt from VAT but said the Excise Tax rates on these items will be adjusted accordingly where appropriate.
With regards to motor vehicles, he said the government wishes to make it explicitly clear that the Excise Tax on motor vehicles will be set at such a level that there is no increase in the tax applied.
DECREASE IN PRICES
Singh noted many goods are currently subject to the payment of 30% consumption tax and the prices of these are expected to drop since the items will be subject to the payment of VAT at a rate of 16%.
These goods include apples, baby milk, baby suits, balloons, bar-b-cue sauce, Baygon, beds, blenders, broccoli, candles, carrots, cauliflower, cell phones, chairs, chisel, clocks, clothes pins, cologne, deodorant, table, electric irons, flowers, food boxes, fridge, glucose, grapes, hair pins, hammer, jeans, jewellery, microwave ovens and sausages.
STOCK-IN-HAND AT DECEMBER 31
On the issue of the treatment of goods and services that will be on hand at December 31, and which would have already attracted consumption tax, the Finance Minister assured that businesses will be granted relief for consumption tax on goods imported if certain requirements are satisfied.
Specifically, businesses which have been registered for VAT before December 15 and which have stock that they imported during the month of December and still on hand at the end of December, will be entitled to claim the consumption tax, limited to the VAT rate paid on those imports, if applicable, as input tax credit, he explained.
He said these businesses would be required to submit a claim that would stipulate that the stock has been in existence at the end of the year and that they were disposed of in the course of furthering a taxable activity of the business, during the period January to March 2007.
On the issue of tax invoices, Singh said the requirements for these are being made more flexible or reasonable to make it easier for businesses to comply.
He said relief will be given to incentive regimes such as businesses that have entered into new investment development agreements with the government. These businesses, he said, may benefit from special treatment on their inputs as reflected in their respective agreements.
He further explained that existing investment development agreements would be restructured to grant appropriate relief.
Under the VAT system, the Finance Minister pointed out that both the producers and consumers will benefit.
The effective tax rate for most goods will be reduced and the base will be broadened to include most services, he said.
Neither goods nor services will be taxed twice as businesses registered for VAT purposes will be able to collect the tax and take a credit for taxes paid on their inputs/purchases and, according to Singh, the difference will be paid to the government.
He noted that the business person does not pay over to the Guyana Revenue Authority all the VAT collected from consumers. The registered business person will deduct all the tax that he/she pays on purchases for the business from the tax collected from consumers and remit the difference to GRA, if there is a balance.
In cases where the VAT paid by the business person on purchases for the business is greater than the VAT collected on sales to consumers, Singh said the business person will get a refund of the excess amount.
This, he said, will allow the government to collect portions of the tax at different stages.