Records at the Guyana Revenue Authority (GRA) show that VAT registered businesses are earning far more profit than they did under the Consumption Tax regime, GRA Commissioner-General Khurshid Sattaur said in a recent press release from his office.
“We have evidence that VAT registrants are recovering in excess of 40 per cent of the VAT they collect from consumers as Input Tax Credit,” Sattaur is quoted as saying in the release.
He said further that this was not possible before but the VAT system was offering them that opportunity.
VAT was providing businesses with a great benefit of cash flow which should result in higher profits and the ability to have greater levels of business activity than that to which they had been accustomed, Sattaur said.
He reiterated, the release said, that since VAT only targeted businesses that had gross sales of $10M per annum, it was inconceivable how these businesses could not have any semblance of an accounting system with the requisite information on their business activities.
“This is most unpalatable,” Sattaur stated. “What then were they using as the basis for filing their tax returns? Are these businesses leading the Commissioner-General of the GRA to believe that their returns did not reflect their true earnings, yet they signed those statements and declared them as true and correct?” he asked.
He also questioned the basis on which they accounted to the government for income from sales when they were not issuing receipts if they had no accounting system.
The GRA Commissioner-General said that VAT simply enshrined in the law acceptable business practices and since it was relatively large businesses that were in the system, they should not find it difficult to comply.
Sattaur contended that businesses should have been glorifying VAT since they had called for the abolition of the C/Tax because of its inefficiencies.
He contended that VAT would make them more competitive and give them the opportunity to expand their operations and improve their earnings, and this would translate into lower prices for consumers.
On the matter of high prices Sattaur asserted that some businesses made as much as 500 per cent profit. “What is very disturbing,” he was quoted as saying, “is for me to peruse records at the Customs as against the prices paid by consumers which are unjustifiably high.” He repeated again earlier comments about the most any item increasing as a consequence of VAT was 16 per cent, and increases in excess of that could not be attributed to VAT.
