Dear Editor,
Please permit me to respond to a letter published in the March 18, 2012 edition of the Kaieteur News which was penned by a concerned citizen and published under the caption ‘Unfair competition between Chinese and local businesses.‘
According to the writer, he or she heard a conversation between two Chinese nationals and a gentleman who appeared to be a business advisor, about the charging and remittance of Value Added Tax (VAT). The writer went on to state that “The Chinese nationals informed the store owner, whose business is registered to administer VAT, that they do not need to charge or remit the compulsory tax to the Guyana Revenue Authority. Now what is appalling is that the gentleman whose business is also on Regent Street was saying that all Chinese Stores’aggregate sales amount to more than the limit of ten million dollars ($10m) per year, yet they do not charge the compulsory tax because that is the way they have been operating ever since they opened their businesses and GRA has never visited them to advise otherwise.” The writer further noted that this situation is of grave concern since it creates an unfair trading environment between locally owned businesses and those owned by non-residents who fail to comply with the VAT laws.
Editor, I have no reason to dispute that such a conversation did occur, what is disputed and indeed appalling as well as of grave concern to the Guyana Revenue Authority (GRA) is that the VAT Act No. 10 of 2005 mandates that VAT be levied and paid at a single positive rate (16%) on the value of – (a) every taxable supply by a taxable person in Guyana; and (b) every import of goods or import of services, other than an exempt import. The statute also makes it mandatory for “…every person who carries on a taxable activity and is not registered, to apply for registration within fifteen days of- (a) The end of any period of twelve or fewer months where during that period the person made taxable supplies the total value of which equals or exceeds ten million dollars ($10,000,000.00), or (b) The beginning of any period of twelve months where there are reasonable grounds to expect that the total value of taxable supplies to be made by the person during that period will equal or exceed ten million dollars ($10,000,000.00).” Once aware of a non-compliant business, the GRA automatically registers businesses which are mandated to be registered for VAT but failed to do so. In the case of businesses that have been referred to by the concerned citizen, the GRA will engage its enforcement officers to make the necessary compliance visits so that the appropriate follow-up action will be pursued.
Notwithstanding this, persons who make, or intend to make taxable supplies, but are not required to apply for registration may apply to the Commissioner-General for voluntary registration in accordance with regulations made by the Minister of Finance.
In instances where the GRA is forced to register businesses which are mandated to be registered, all sales made prior to registration are deemed VAT inclusive. This means that the business to which the writer refers and other non compliant businesses will be required to account for the VAT for which they failed to account for over the weeks, months, or years they would have been required to be registered.
On the other hand, the law states that if a business is registered for VAT and it does not charge VAT on any sale, then the payment received for the sale will be deemed VAT inclusive. Those persons who are registered for VAT and who are not accounting for or remitting the VAT pursuant to the law will be prosecuted accordingly. A person, who fails to pay tax by the due date, is liable to pay interest at the rate of two per cent on the amount which was not paid.
The interest is calculated from the date on which the payment was due until the date on which the payment was made.
Registered persons have an obligation to maintain proper books and records; failure to do so can lead to but is not limited to conviction.
I wish to reassure the writer and the general public that anyone caught in violation of the tax laws will be prosecuted. I take this opportunity to once again encourage the writer or anyone with information regarding any dishonest or unscrupulous businesses to contact the GRA’s
Intelligence Unit on telephone number 225-6687, if they wish to provide discreet information concerning persons who defraud the revenue of the country.
Yours faithfully,
Khurshid Sattaur
Commissioner-General
Guyana Revenue Authority
