By Kiana Wilburg
The Guyana Revenue Authority (GRA) has commenced a serious crackdown on the misuse of concessions. This was revealed by GRA Commissioner-General, Godfrey Statia.
Statia said that the GRA is also working along with the Guyana Office for Investment (GO-Invest) in this regard. He said that the two bodies have worked out a fresh set of rules that have been put in place, as well as a new “rationale” for how concessions ought to be granted.
To ensure better accountability, the Commissioner-General asserted that persons who are in receipt of concessions are now required to submit a quarterly report to GRA. In addition to this, Statia revealed that physical checks are being done regarding the concessions granted, so as to ensure they are being used for the intended purpose.
He emphasised that if the authorities recognize that concessions are being misused, then the relevant taxes which the items attract are instituted.
“A few persons have actually fallen into that net; it is just that we do not publicize it. There are a few persons who were already requested to pay certain taxes regarding concessions they received. In some cases, we have seized articles that were given duty-free,” the Commissioner-General added.
Statia said that on average, GRA was able to find about three persons on a monthly basis who were asked to pay taxes on items for which they got concessions or they were taken away. He said that in some cases, a few persons have paid.
Statia noted that GRA has a formal unit which is responsible for monitoring all concessions granted. He said it is referred to as the Exemptions Unit.
“And what we have found is that the smaller the exemptions, the higher rate of taxes you get. An analysis that we did shows this. We saw that companies with big exemptions give back way less to the country. By this I mean that those who get exemptions lower than $50M give back a lot in taxes, but those who get hundreds of millions worth in exemptions give you back virtually little to nothing. It is about 5 percent you get back in taxes.”
Also speaking on this matter recently was CEO of GO-Invest Owen Verwey.
In an interview with this newspaper, Verwey acknowledged that the entity was used in several instances by businessmen who did not use their concessions for the intended purpose.
He also noted that unlimited tax breaks and concessions were granted in the past. Verwey said that this practice occurred for several reasons. The CEO cited the lack of controls and proper processes and systems being in place as contributing factors. Now that this has been corrected, Verwey said that concessions will be granted based on the scale of the business as stated in the investment agreement.
“There is a process in place for an application for concessions. By this way, we can see what exactly is being applied for, whether it is furniture, tools, vehicles or machinery. We can assess, for example, that if your operation is 1200 acres, then you don’t need a concession agreement for an unlimited amount of excavators or even 15. So I assure you, we have certainly stepped up the due diligence aspect. This will help us to make the determination of what is reasonable or fair for the business.”
The CEO also reminded that the abuse of the system was well documented in a forensic audit on the entity.
Forensic auditors of Nigel Hinds Financial Services discovered that in several instances, some businessmen used GO-Invest to obtain incentives and tax breaks on certain products, only to keep them for their personal use.
In their report, the auditors said that the entity is a conduit for corporations and other businesses to obtain tax concessions.
“However, there is evidence that despite the fact that concessions were granted to many investors, little or no business activity related to the Investment Agreement took place,” expressed the auditors.
They added, “In some instances, GO-Invest was used by businessmen as an opportunity to obtain products without paying import duty and other taxes, then reselling the goods or keeping them for personal use.”
Also contributing to the abuse GO-Invest opened itself to, was the fact that its system for filing was in an inexcusable state.
This contributed greatly to the inability of management to provide timely and accurate information regarding the operations of GO-Invest. In many instances, the auditors said that documents placed in an investor’s file were not bound, resulting in missing documents.
The auditors said that in some instances, files examined were not properly indexed, so there is no way of knowing what should actually be in the file. It was noted that the movement of files were not always documented, thus making it difficult to locate files in a timely manner. At the time of its report, the auditors said that files for Zhonghao Shipyards Inc. and Atlantic Network Inc., could not be found by officers of GO-Invest.
The forensic auditors also criticized the lax manner in which GO-Invest treated investment agreements for some businessmen.
The auditors said that in many instances, files examined had un-dated draft Investment Agreements, which undermined the integrity of the documentation process for a key area of GO-Invest responsibilities. The forensic auditors said that this opened the verification and review process to opportunities for forgery and undermined the use of an audit trail.
The auditors said that there was no indication that GO-Invest complied with Section 41 of the 2004 Investment Act, which requires annual recommendation to the government for alteration to the regime of fiscal incentives as detailed in Section 2 of the Income Tax in Aid of Industry Act of 1994.
Additionally, the auditors said that the Investment Act of 2004 made the Guyana Office for Investment, the primary investment agency in Guyana. The auditors said that it is unfortunate, however, that GO-Invest does not have a comprehensive database of investments made in Guyana.
In this regard, they made reference to the fact that Kaieteur News carried an article where the former CEO of GO-Invest Keith Burrowes admitted that “Go-Invest can only account for 10% of the investments made in the country”.
Also, the auditors said that the management of GO-Invest acknowledged that some investment agreements falling within their range of investments for consideration were done directly by the Office of the President.
Feb 28, 2020Guyana’s ‘Lady Jags’ go down to Mexico; focus now turn to round-of-16 Guyana’s ‘Lady Jaguars’ went down to group winners Mexico by a 0-3 margin last night at the Olimpico Felix Sanchez...
Feb 28, 2020
Feb 28, 2020
Feb 28, 2020
Feb 28, 2020
Feb 28, 2020
I refer readers to my column titled, “Claudette Singh, Lennox Shuman, GECOM and tragic Guyana” of Saturday, February... more
Editor’s Note, If your sent letter was not published and you felt its contents were valid and devoid of libel or personal attacks, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]