Head of the Guyana Revenue Authority (GRA), Khurshid Sattaur says that many businesses are still offering not to charge customers Value-Added Tax (VAT) and he flayed the private sector for inducing bribery in the agency.
He raised these issues in a letter to Stabroek News on December 8th 2014 and expanded on them in an interview with the newspaper.
Sattaur stated that tax officers are easily bribed by businesses looking to evade the payment of the 16% VAT for a number of reasons including the lack of a living wage. He emphasised the correlation between corruption within the public sector and the inducements by the private sector and encouraged the latter to be more responsible.
The Head of the GRA had raised concerns over VAT delinquent businesses. Speaking to Stabroek News on the matter Sattaur stated that it was the private sector that “forced” and “lured” officers into accepting bribes to not report VAT evasion.
He said that businesses “cajole them. Coerce them…they dangle all sorts of enterprising enticements,” which render officers incapable of rejecting bribes and conducting their legitimate work of tax collection.
Sattaur stated that the authority dispatches secret shoppers and routinely did investigations to expose negligent businesses but that does not tackle the problem of corruption within the GRA itself if officers are willing to accept bribes after an investigation is carried out to ensure that fraudulent information is not reported.
When pressed by this newspaper as to why the GRA would place blame on businesses as opposed to the officer responsible for upholding the law, Sattaur said that their wages are not enough for them to live the lifestyle of their choosing.
He said that he was worried about it but declined to state what is being done about officers suspected of accepting bribes. Sattaur instead noted that there were over 1000 employees in charge of a variety of departments so keeping track of who was susceptible to bribery and who was not was difficult.
The Private Sector Commission has raised the concern that businesses that are non-compliant with VAT are severely affecting the competitiveness of compliant businesses. Stabroek News asked Sattaur since these concerns were lodged by the private sector what was the GRA’s plan of action? He stated that it was not easy to investigate officers based on allegations.
Evading the 16 percent VAT continues to be a significant problem for the GRA, however Sattaur was not in a position to say how many businesses continue to be non-compliant. Sattaur told Stabroek News that VAT-registered entities have a responsibility to pay the tax and issue receipts. He said that if businesses don’t issue receipts in order to opt out of the tax then those businesses have no corresponding proof of inventory and of the sale.
In his letter of May 8th, Sattaur had said “It is no secret that, increasingly, there is a high frequency of private sector businesses offering bribes to tax officers not to unveil their fraudulent reporting; and more alarmingly, that billions are granted in concessions to businesses in the area of machinery and equipment and raw materials that are either diverted for other purposes or sold to persons who are not entitled to such benefits. The GRA spends millions of its rather scarce resources as well as the officers’ valuable time every year to police such criminal activities. This does not include the billions that are being evaded annually from fraudulent claims for VAT refunds even as many businesses continue to engage in the very insidious practice by the private sector of offering not to charge VAT on condition not to provide receipts of such sales.”
Chairman of the PSC, Ramesh Persaud told Stabroek News last week that during a recent meeting with the GRA, commission members expressed continued frustration over businesses that evade the 16 percent tax.
Persaud stated that PSC members have raised their concerns but the commission has not done any extensive research on the problem. He stated that commission members did not specifically call out other members for delinquency in paying VAT.
The Chairman stated that the GRA had the responsibility of ensuring that businesses which are registered as VAT members pay their tax, adding that prosecution was one way to curb the trend.
He said that any information presented to the GRA should be used to enforce the law inclusive of complaints and allegations.
In the December 8th letter, Sattaur, referring to increased tax collection, said “These phenomenal increases in the area of the revenue collection of the agency have been as a result of the direct targeting of private sector businesses for false declarations in their imports and in the inaccurate reporting of their income detected through the highly effective work conducted by the Revenue Protection and Audit and Verification Units which, on an annual basis, rake in an excess of $2.5 billion in additional revenues. In addition, revenues are being garnered from many private sector businesses that continue to withhold the payment of their taxes or that of their employees or VAT payers, even though such payments were due and even in some cases as their returns suggest, such payments were made. This area, for which the GRA is proud of its performance, is mainly responsible for the collection of in excess of $5 billion in taxes every year.”