VAT misinformation warning
Guyana Chronicle
January 7, 2007
THE Guyana Revenue Authority (GRA) yesterday reminded businesses that it will not spare any effort to enforce the law with regards to ensuring a smooth implementation of the much-touted Value Added Tax (VAT).
The introduction of VAT from January 1 this year has been marred by initial hiccups and glitches so far, some of which were expected.
The GRA in a statement yesterday also expressed concern about the action by some television hosts and owners who it said are peddling misinformation about VAT.
“We view this action which borders on violation of the law as being palpably irresponsible and undermines the efforts of noble businesses, policy makers, the GRA and ordinary citizens who have resolved to contribute to the modernisation of Guyana’s tax regime,” the authority said.
The tax implementation and executing body said it is contemplating action against businesses and individuals engaging in these practices.
“We acknowledge that the implementation of this tax has been met with some bottlenecks which are expected with any tax reform of this nature…but while the GRA is pleased that the country has commenced the implementation of VAT which represents a milestone achievement in our efforts to modernise the country’s tax regime, we are not oblivious of these hiccups,” the body said.
“In the same way we are heartened by the decision of a growing number of businesses to adjust the Consumption Tax out of their pre-VAT prices before applying the VAT rate in order to either maintain or reduce final prices,” the GRA added.
The GRA also expressed concerns relating to the display of certificates, invoicing requirements, mounting of adequate signs to indicate whether their prices are VAT inclusive or exclusive and inordinate increase of prices.
On this note, it said it would like to remind businesses that the VAT law stipulates penalties for violating requirements relating to these and that it will not spare any effort to enforce the law.
And in its continuing efforts to fairly and efficiently administer the tax, the GRA said it will be supplementing its conventional audit procedures with additional investigative methods to ensure that businesses remit all the VAT due and unearth any violations of the VAT law.
The GRA said it is also contemplating a novel measure of offering incentives to citizens who will provide evidence that will provide an audit trail leading to unearthing of violations of the VAT law.
“This, we believe, will not only benefit the VAT system but also administration of all the other taxes (and) this will ultimately benefit all Guyanese as taxes will be reported much more truthfully,” it offered.
“We continue to implore businesses to play their role in contributing to a seamless transition to the VAT regime; you are reminded that a key factor which will aid in this transition is a steady rate of consumption of commodities in the country.”
“If consumers shop less as a result of higher prices, businesses stand to suffer revenue losses,” the GRA argued.
Over the coming weeks, the GRA said it will continue its interaction with businesses to implement the VAT in a way that will result in full compliance of the law and realisation of the tremendous benefits of the system.
Since VAT came into force, the GRA has been stepping up its policing mechanisms and enforcement of the law relating to the tax.
Muneshwers Limited and N.P Home Department Store in Georgetown were on Friday served summons for violation of the law relating to invoicing requirements.
Several other businesses will be prosecuted for similar offences, the GRA said in a statement.
It said its prosecution of businesses failing to meet VAT requirements is a result of the authority supplementing its audit procedures with additional investigative methods to ensure that businesses remit all the VAT due and unearth any violations of the VAT law.
The law requires that VAT returns be filed within fifteen working days following the preceding tax period (one calendar month) and the correct amount of tax paid to the VAT Department.
Staff from the GRA are continuing their outreach and monitoring of VAT processing at several businesses and at the ports of entry, the authority said.
Their report last week, it said, suggests that businesses have improved their systems and are in greater compliance with the VAT law.
The government Thursday announced it is taking urgent steps to rectify the initial hiccups and glitches associated with the implementation of VAT.
Cabinet Secretary, Dr. Roger Luncheon, said the glitches are mainly due to interpretational issues about the tax and price gouging by some very unscrupulous businessmen.
Luncheon told reporters the government is paying “very close attention” to the general implementation of VAT and more specifically to the “acute developments” hindering a smooth implementation of the much talk-about tax.
The new taxation system replaces the 30 per cent consumption tax with the 16 per cent VAT.
Under the new system all basic food, educational and medical items and fuels used for cooking and transport are zero-rated or exempt.