The Guyana Revenue Authority (GRA) received more than $4 billion in income tax from the self-employed last year but according to Auditor General Deodat Sharma only a mere 20% of the active registrants filed returns.
In the 2016 Auditor General’s Report, which was tabled in the National Assembly two Thursdays ago, Sharma noted that “as at 31 December 2016, there were 131,893 registered self-employed persons in the TRIPS [Total Revenue Integrated Pro-cessing System] database, of which 92,326 were identified as active. However, only 18,337 persons or 20% of the active registrants filed returns, therefore a total of 73,989 persons or 80% of the active registrants did not file their tax returns.”
Similarly, in 2015, 78,993 persons did not file their returns, while in 2014 only 37,252 returns were filed though there were 85,753 active self-employ-ed persons.
In the report, GRA Commissioner-General Godfrey Statia is quoted as explaining that “in light of the number of self-employed taxpayers not filing returns and the limited resources at the disposal of GRA, the Authority has adopted a risk management approach to prioritise the high risk taxpayers with great revenue implications.”
He further noted that demand notices are issued to defaulting self-employ-ed taxpayers on a continuous basis and assessments raised in the absence of the returns in some instances.
During the period January 1, 2016 to December 31, 2016, a total of 18,543 demand notices were sent to defaulting self-employed taxpayers, while four cases were sent to the Legal Services Division for legal action to be taken for failure to submit tax returns.
Statia had previously identified professionals, such as doctors and lawyers, as part of a hard to tax group and noted that 2017 would find these persons under intense scrutiny.
At his end of year press conference in 2016, the GRA Head stated, “That has been a problem that the GRA has faced for a lengthy period of time. In most countries where there are professionals, they use what is called presumptive taxation, where you are going to look at like trades and decide that you will tax them according to the trade they are in.”
In June this year, he had also told Stabroek News that GRA had started training its officers in the presumptive method of taxation.
Meanwhile, the Auditor General’s report also took issue with the number of professionals who did not pay their practitioner’s fees in 2016.
The report stated that for the year 2016, amounts totalling $5.896 million were collected from 267 professionals, as compared with $5.795 million from 337 professionals at the end of 2015.
It further noted that a request was made in May, 2017, for the lists of registered professionals from the various professional bodies and a list of all certificates printed for the year 2016.
Despite this request, at September 2017, only two lists (the Dental Council and the Guyana Institute of Architects) were presented for audit. As a result, the number of registered professionals in practice that had not purchased certificates and whether certificates were issued only to professionals who met the requirements could not have been ascertained.
“In addition, it was noted that 201 professionals paid for certificates after the stipulated date,” it added.
Responding to these observations, the GRA stated that numerous attempts were made to have the list of Professionals registered under each body submitted to the Revenue Authority on a yearly basis but only the Dental Council and the Guyana Institute of Architects submitted their registration lists for the year 2016.
These lists noted that 65 dentists and 10 architects are presently practising.
“Due to the non-submission of the lists by the Professional bodies, Management is not in a position to present the other lists of Registered Professionals for audit. Additional efforts would be utilised to have the professional bodies submit their lists on a yearly basis,” the GRA explained.
The Auditor General also noted that a Conservatory Order instituted in October 2003, restraining GRA from assessing and collecting increased fees from all professionals, was still in effect and the matter had not been finalised. This order barred the authority from collecting an additional sum of $80.475 million in professional fees.
GRA stated that with the Conservatory Order still in place, a number of professionals would visit GRA and make payment towards Professional Fees and not apply for the Certificates. “This issue with the professionals result in the variance of persons being issued with Certificates (which is based on application for Practice Certificate) against those who paid for Professional Fees for a particular period,” it explained.