Even though the Ministry of Finance moved to discredit statements from the political Opposition that the Government is moving to implement Value Added Tax (VAT) on all exports, this misleading perception was still being bandied about.
The Private Sector Commission (PSC) on behalf of other agencies recently sent out a missive to the media which suggested that it lent some amount of credence to the misconception.
This move by the Commission is what forced the Guyana Revenue Authority (GRA) to call a Press Conference, yesterday, to set the record straight once and for all.
Contrary to what is being peddled in some quarters, GRA Commissioner General, Godfrey Statia, categorically stated that there was never any move by the government to have all exports attract VAT.
The Commission General said, “There is the contention that Government has disallowed exporters the right to reclaim the Value Added Tax paid on inputs used to produce goods and services to be exported from Guyana.
“It should be noted however that from the implementation of VAT in 2007, only exempt goods exported from Guyana are unable to reclaim input VAT and not all exports as alluded to by the PSC.”
Statia said that previously, the Government used zero-rated goods to lower the tax burden on low-income households. He explained that for items with no value added or that are “the first in the chain”, there is no difference to the consumer between exempting and zero-rating the items.
The GRA Commissioner General said that zero-rating breaks the VAT chain and invites revenue leakage and fraud (eg. Submissions of fake invoices showing VAT paid in order to claim fraudulent refunds, or charging VAT and not remitting VAT due).
He said that exemptions also break the chain but they pose much less of a revenue risk since they do not generate excess credit positions and applications for refunds.
The Commissioner General reiterated that the Government has considered the impact of all tax measures introduced and made all efforts to minimize production costs by ensuring that VAT is not charged or payable on items first in the chain of production and other major expenditure items.
He said, “The GRA welcomes empirical evidence to prove that businesses are affected, and thereafter will recommend to the Minister of Finance changes to the Schedule and VAT Act to minimize such effect.”
The Tax Chief said that this is an ongoing exercise, and was the case for the fishing and forestry products industries where after being presented with empirical evidence in 2017, changes were effected to the Vat Schedules, thereby allowing the affected items in the “manufacturing process” to be exempted.
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