Latest update April 19th, 2024 12:59 AM
Jan 10, 2018 News
– says “too many persons continue to flaunt unexplained wealth with impunity”
While many have acknowledged that the Guyana Revenue Authority (GRA) has made a number of changes for the better, there are others who stress that more still needs to be done.
One such person is Chartered Accountant and former Auditor General, Anand Goolsarran.
In his recent writings, the anti-corruption advocate stated that indeed, GRA has the potential of doubling its assessment and collection of revenue from the various taxes that it administers. Goolsarran noted, however, that one area which GRA needs to pay particular attention to, is in relation to the conduct of arbitrary assessments, also called lifestyle audits, where there appears to be a significant mismatch between the reported income of individuals and their observable lifestyles.
“Suffice it to state that too many of these persons continue to flaunt unexplained wealth with impunity. There are also many large unincorporated entities for which there are no legal requirements to file audited accounts with the GRA. This poses significant difficulties when considering the tax liabilities of the owners of these entities.”
On the other hand, Goolsarran said that while there is a requirement for incorporated entities to file audited accounts with GRA within a specified timeframe, and duly certified by chartered accountants in public practice, GRA must be more proactive in carrying out its own independent assessment as to whether these audited accounts do indeed reflect a fair presentation of the financial condition, performance and cash flows of these entities.
Goolsarran said that GRA must be prepared to challenge these accounts rather than accept them at face value simply because they have been certified by chartered accountants.
IMF HIGHLIGHTS
Goolsarran also pointed to the fact that the International Monetary Fund (IMF), in one of its latest reports, highlighted that there were several weaknesses within the revenue authority.
In the area of verification of returns filed by taxpayers, the Fund noted several problems. It said that there was no automated cross-checking of internal and external information to detect and deter inaccurate reporting; no proactive initiatives to encourage accurate reporting; and no monitoring of the extent of inaccurate reporting in any of the core taxes.
In addition, the IMF found that GRA’s Customs Department was not used on a systematic basis to verify amounts reported for personal and corporate taxes. The need to monitor regular tax revenue losses from inaccurate reporting was also highlighted, especially by business taxpayers, so that the necessary actions can be taken to ensure compliance. Accordingly, the IMF gave a D grade for this activity which is considered the lowest level of performance.
There was no system of public or private rulings nor were cooperative compliance arrangements in place to facilitate GRA’s clarification of tax issues. There was also no legal framework to support the issuance of binding rulings nor were there any compliance gap studies for Value Added Tax (VAT).
MOVING FORWARD
In the face of the aforementioned, GRA’s Commissioner General, Godfrey Statia informed this newspaper that efforts are already in place to correct such deficiencies.
In fact, Statia revealed that the IMF report was done based on his request. He noted that last year, a team from the Caribbean Regional Technical Assistance Centre (CARTAC) visited Guyana. The Commissioner General said that he asked the team to have a diagnostic study conducted on the revenue authority to ascertain its strengths and weaknesses in tax administration. Statia said he was later informed by the said team that such a study can be conducted by the IMF.
The assessment was carried out in March and the report on the findings submitted to the revenue authority in May. The Commissioner General asserted that the IMF made recommendations based on its findings. He noted however, that several of these suggestions for improvement were either already a work in progress or envisaged to be done next year.
Statia acknowledged that there is a manual system at GRA, but noted that the very weaknesses regarding declarations exist because of an IT system that is not working effectively. He said that moves are already in the pipeline to correct this.
The Commissioner General said, “I am very much aware of the findings regarding false declarations. But let me say this, taxation is circular. What you miss at the customs part you ought to find at the VAT part, and what you miss there you ought to catch it at the Income Tax part. In order to do that, it therefore means that all the information must be stored in a common database…for you to do that, you need a proper IT system.”
He continued, “IT systems are not only lagging at GRA, but all over. GRA is now straightening up its IT system. Unless you have a proper IT system, you cannot cross- check, because everything is manually done; so if the IT system is not up and running you will have problems.”
Statia added, “What we have done is, we have now started doing all the scanning of all the (Income Tax) Returns and all these documents that come in, so by mid next year, when a man comes, he brings his original, the scanning is done there and then fed into the system…There is no need for him to bring that back.”
Where is the BETTER MANAGEMENT/RENEGOTIATION OF THE OIL CONTRACTS you promised Jagdeo?
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