There seems to be no clear policy by the Guyana Revenue Authority (GRA) with regards to the implementation of Value Added Tax (VAT) on sports equipment and sports accessories, according to the owner of the West Indian Sports Complex, Feroze Mohammed.
He says he is still awaiting information from the GRA as to which sports items can be taxed and which ones cannot.
“The GRA has not come into me as yet. I don’t know if I am doing anything wrong,” Mohammed said, adding that he is operating under the basic information gleaned from GRA booklets.
The store is charging VAT on sports clothing, shoes and drinks. But VAT is not charged on the remaining items, store supervisor Insaf Ali told Stabroek Sport.
Ali told this newspaper that the manager of the store is awaiting a description of the sports items that are zero-rated and those that are not.
Mohammed says the GRA needs to come in and regularise the situation.
GRA’s position
An officer at the Guyana Revenue Authority (GRA) told Stabroek Sport yesterday that all sports gear and equipment are zero-rated for VAT except those that are specified in paragraph (ii) of the Customs Act.
Those items that are specified in paragraph (ii) of the Customs Act include motor vehicles for motor racing along with complementary motor vehicle parts. The GRA officer said that few items in sports are taxable.
“Based on my information only a small amount of sports items are subject to the Value Added Tax (VAT) and Consumption Tax,” the officer said, adding that it has always been that way in sports.
According to the officer at the VAT headquarters, the few items in sports (motor cars for car racing, etc.) that are subject to tax fall under a different tax category than those sports items that are exempted from tax. “Football, table tennis and basketball gears, etc. are zero-rated so you are not supposed to pay any VAT on them, neither is a business registered to charge VAT expected to solicit the 16 percent VAT on zero-rated items,” the official stated.
The customs officer said that the sports items that qualified for exemption under the First Schedule of the Customs Act before the implementation of VAT will remain exempted until otherwise stated in the Act.
“All sports gears are free and free,” the officer said. Items that are “free and free” mean that the items attract no consumption tax and no VAT. Before VAT, a 10 percent consumption tax was charged on sports goods. The officer said that certain board games (chess, etc.) would attract duty as well as VAT but that is an issue that needs to be ironed out from Customs’ end. The officer suggested that those games might not be treated in the same manner as sports gears and equipment.
Charging VAT
Meanwhile, Mohammed’s competitor Woodpecker Products Trophy and Sports Store on the other hand is charging the 16 per cent VAT on all items, including lawn tennis balls which are sometimes used for the popular ‘tapeball’ cricket.
Managing Director of Woodpecker Products, Trophies and Sports, Ltd, Luana Fernandes told Stabroek Sport that prior to the implementation of VAT on January 1 this year, sports items were subject to 10 per cent duty.
Prior to VAT a pack of three balls cost $1,020, but after the implementation of the tax on January 1 the balls now cost $1,183, minus a five percent discount that the store now offers. VAT was even slapped on the Cricket World Cup (CWC) gear on display in the store. A female outfit before VAT had cost $7,300, but with VAT, the same outfit went up to $8,568 at Woodpecker Sports Store.
Fernandes said that she was required to pay 30 percent Consumption Tax on some items that she had ordered since December last year. She said she cleared the items on January 8 this year.
“If is that Consumption Tax is non-existent in 2007, how can you charge Consumption Tax on sports gears?” Fernandes asked. “People believe sports gears are zero-rated but that is not so,” she pointed out.
Fernandes’ cashier at Woodpecker, Maria Hintzen told Stabroek Sport that the tax has affected sales since people are refusing to pay the price after tax. She said, however, some people are ignoring the tax and making purchases anyway.
“Sports gears are already expensive, then to add VAT. People are complaining when they come to buy. VAT has caused people to stop buying, people are concentrating on food items alone,” Hintzen said.
GOA’s concern
Assistant secretary/treasurer of the Guyana Olympic Association (GOA), Garfield Wiltshire, expressed concern over the situation with the VAT and local sports.
“Most of the sports goods required duty alone, no Consumption Tax, but now with VAT sports goods are up by 16 percent,” Wiltshire said. He contended also that the tax will make it more difficult for local sportsmen and women to acquire gear.
“Sportsmen and women are already struggling to acquire gear, now with VAT it will make it even more difficult,” the GOA executive said.
He said that the tax, if not clarified, would lead to an undermining of President Bharrat Jagdeo’s allocation of $100m to sports in 2007.
“President Jagdeo allocated $100M to local sports but the tax will take all that back if the situation is not clarified,” Wiltshire declared, noting that the GRA needs to clear up the issue with the tax on local sports gear as soon as possible.
