Two years later...Tax Reform Commission’s call for review of “exorbitant” exemptions goes unanswered

Two years later…Tax Reform Commission’s call for review of “exorbitant” exemptions goes unanswered

May 21, 2018 News

More than two years ago, the Tax Reform Commission (TRC), which was set up by the Granger Administration, called for the review of the “exorbitant” concessions granted to companies in various sectors. But that call is yet to be answered by the Coalition Government.
The Commission comprises of National Industrial and Commercial Investment Limited (NICIL) head, Maurice Odle; Chartered Accountant, Christopher Ram; Guyana Revenue Authority (GRA) Commissioner General, Godfrey Statia and economist Dr. Thomas Singh.

GRA Commissioner General, Godfrey Statia

Chartered Accountant, Chris Ram

NICIL Chairman, Maurice Odle

In its report, the Commission noted that Guyana is one of the leading countries with massive overlay of tax exemptions and remissions that ultimately make tax administration difficult and revenue losses significant.
The Commission pointed out that the relatively weak revenue buoyancy in Guyana in recent years is related to the spate of tax incentives that have been granted to companies.
The Commission stressed that more detailed studies of the economic efficiency and revenue costs of these exemptions should be undertaken in order to plan a transition away from use-based exemptions to more limited- automated exemptions.
Furthermore, the Commission said that the losses from the granting of Investment Development Agreements are a cause for some concern. The TRC pointed out that many sectors receive concessions, far more than they contribute in taxes.
The Commission also said that while this fact itself does not per se justify the abolition or the withdrawal of the concessions, “it is clear that an urgent review is required.”
In this regard, the Committee recommended that clearer parameters be established along with guidelines for the entering into Investment Development Agreements, so as to reduce the discretionary powers of the Minister. The Commission commented, ‘We understand that in some cases, IDA’s have been granted to long-established, profitable companies.”
Significantly, the Commission called for the introduction of a post-audit system for concessions granted including the posting of a bond/guarantee to ensure that commitments are met.
It called too for a periodic audit and publication of reports of tax holidays granted and investment agreements entered into.
Additionally, the Commission said that there is a need for a review of the fiscal regime governing petroleum products specifically with a view to rationalizing exemptions, as Guyana is currently losing approximately $20B in exemptions (Import Duty, Excise Duty and VAT).

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News