VAT collection woes loom as remittance date nears
Kaieteur News
January 17, 2007
Many proprietors who offer credit sales say the configuration of the VAT system will result in significant losses, and they are calling on the GRA to consider granting concessionary measures.
The business owners bemoaned the fact that the VAT Act mandates them to remit taxes on the sales of all supplies of goods or services, rather than on those for which payment is received.
This, they say, will result in them incurring losses in the event of bad debt, which is inevitable in such transactions.
The advertising manager of one television station noted that advertisers are allowed a four-week credit span.
He lamented that since the establishment of the station, he has had to suffer substantial financial losses from clients who paid late, or not at all.
“We still have clients who owe us for advertisements they took as long as three years ago. We tried to collect the monies for a while, but had to give up and accept our losses.
“Now with this VAT, these losses will be even more significant…
“Government should amend the system so that we are allowed to only remit taxes on the amount of monies that we collect.”
Part Five of the VAT Act states that, “A supply of goods or services occurs on the earliest of the date on which either the goods are delivered or made available or the performance of services is completed, an invoice for the supply is issued by the supplier or if any consideration for the supply is received.”
The Act further states that a supply of goods under the credit agreement occurs on the date of commencement of the agreement.
“However, the supply of goods pursuant to a lay-away agreement occurs when the goods are delivered.”
Commissioner General of the Guyana Revenue Authority (GRA), Khurshid Sattaur, stressed that the onus is on businesses to ensure that they collect all monies owing to them.
He made it clear that on the 15th working day of each month, the GRA expects a tax return of the VAT sales made on the supplies of goods or services for the previous month.
Several of the businesses reported that they have been putting systems in place to help guarantee the collection of at least the VAT from clients.
One television station related that whilst credit is still afforded, customers are asked to pay the 16 per cent in cash on booking the advertisements.
Other agencies have shortened the credit span for the payment of the amount that constitutes VAT.
“We wrote letters to our clients telling them that they now have to pay the VAT by the first week of the new month,” one proprietor said.
Generally, advertising businesses are predicting a decline in revenue as a result of the new tax system.
“It's too early to tell, because January is usually a slow month for businesses, but I can see that advertising companies will lose business for more than one reason.
“Most advertisers will have a certain amount of money that they will spend on advertising; and now, with VAT, the money will give them fewer advertisements.”