New tax exemptions law vague – says Shadow Finance Minister

May 13, 2010 News

Shadow Finance Minister, Winston Murray, is of the opinion that the recently tabled Fiscal Enactments (Amendment) Bill is very vague as to who will benefit.
Murray said that the problem he had with the proposed legislation was the fact that it is not clearly spelt, “I don’t know whom it is going to serve.”
He said that the Explanatory Memorandum did not aptly spell out who are the beneficiaries of the Bill.
“This Bill seeks to give effect to a waiver of tax on income of a designated small business lending company derived from loans provided to a small business in a manner specified by agreement.”
According to Murray another glaring problem he had with the Bill was the fact that it gives the power to decide who benefits from tax exemption.
Murray said that for investors to come to Guyana there must be a level playing field.
The Shadow Finance Minister asked that there be spelt out in law, clear criteria that beneficiaries of the tax exemptions must satisfy.
Asked whether he would support the Bill, Murray said that it would be premature to make a definitive statement and that it would be based on what information is supplied by the Minister in his presentation to the House when the debates commence.
The Bill, if and when enacted, will amend the Income Tax Act as well as the Corporations Act.
Under the amendments to the Income Tax Act, the Bill is seeking to include the clause which reads that the “(Finance) Minister may, by order, designate as an approved small business lending company, any company which has entered into an agreement with the Government in which the company agrees to finance small business loans in accordance with the terms of the agreement.”
The Bill also proposes to include in the Income Tax Act that “notwithstanding the other provisions of this Act, there shall be exempt from tax in the manner and to the extent as may be provided in the agreement the income of an approved small business lending company.”
That agreement referred to in the proposed Bill must include a list of collateral to be accepted for the loan and the rate of interest to be charged on the loan.
There must also be included a statement that in addition to the exemption on tax where any financial institution under the Financial Institutions Act 1995 is designated an approved small business lending company, the reserve requirement mentioned in section 41 of the Bank of Guyana Act 1998 shall, “where the Minister so approves, not apply to that company in relation to the liabilities used for small business loans.”