Latest update March 28th, 2024 12:59 AM
Sep 16, 2018 News
By Kiana Wilburg
Blatant breaches of the re-migrant scheme have resulted in a number of high end vehicles making their way into Guyana. This was confirmed recently by Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia.
The tax chief revealed that GRA has been able to ascertain how persons have been abusing the scheme to get the luxury vehicles here.
“Investigations have revealed that funds are provided to prospective re-migrants who buy the said high end vehicles and transfer possession by means of power of attorney. They then return overseas during the stipulated period (183 days) that they are required to remain in Guyana. Some of these high end vehicles include Rolls Royce, Hummers, Range Rovers, and Ferraris.”
When the scheme is abused in this manner, Statia said that over $50M in duties is lost on a Rolls Royce and over $25M on a Hummer or Range Rover.
To curb this practice, Statia said that GRA has been requesting the source of funds for these re-migrant applicants. Statia said that these acts constitute serious offenses which warrant the Commissioner-General under Section 36 of the Customs Act to impose penalties, inclusive of forfeiture or fines in lieu of forfeiture.
Last December, alone, Statia said that over $50 million in fines, penalties and duties were recouped from these individuals.
Given the aforementioned, Statia said that he remains a strong proponent for tax credits versus exemptions to re-migrants. He holds the view that the system needs to change very soon since the revenue authority is losing billions of dollars in taxes.
CASE FOR TAX CREDITS
Guyana loses billions of dollars on an annual basis through the granting of tax exemptions. Hoping to cut these losses significantly, the Guyana Revenue Authority (GRA) has its sight set on implementing a number of measures.
Already, the revenue earning authority has reduced, to a great extent, the number of exemptions it has granted for 2017. Be that as it may, it is weighing the pros and cons of implementing a system for tax credits as opposed to the usual exemptions which are approved.
The case for tax credits was initially proposed for Guyana by some of the nation’s best tax advisors, which were contracted to be part of the Tax Reform Commission in 2015. That Commission comprised the GRA Commissioner General, Godfrey Statia; Chartered Accountant, Christopher Ram; Economist Dr. Maurice Odle, among others.
In the report, which was prepared by the Commission, Tax credits are noted to be a type of incentive, which allows certain taxpayers to subtract the amount of the credit from the total taxes owed. When appropriately used, it encourages investment and compliance.
Unlike upfront incentives, which are hard to police, tax credits are only given upon submission of the proof of the actual activity, and hence forces the taxpayer to comply in order to so benefit.
The Commission said, “For instance, instead of granting exemptions upfront to gold miners, an efficient tax credit regime will allow for such a credit to be granted when gold is sold to the Board.”
The Commissioners believe that this will not only encourage compliance but will reduce smuggling and sale of the exempted fuel, thereby minimizing the probability that these persons are unjustly enriched at the benefit of the state.
The Commission stressed that the current methods for granting and verifying tax exemptions consequently needs to be reformed and strengthened urgently in order to stop/control the drainage on the State’s revenues.
“It may be more prudent to require the payment of all applicable taxes upfront and for applications to be submitted for refunds, subsequently, when valid evidence is available and proper audits can be performed, or to replace the granting of tax exemptions with the granting of tax credits which can be claimed when tax returns are submitted, or a hybrid of both systems.”
The body recommended that consideration be given to phasing out, where possible, all duty and tax free allowances in favour of a system of tax credits, a principle inherent in the system of capital allowances.
Statia told Kaieteur News that he is a proponent for tax credits being applied in Guyana. He holds the view that there is a strong case for it here.
He said, “They are simple and easier to administer. They allow you to comply before you get the tax credits. If you move away from exemptions and give tax credits life would be easier as long as it is administrated in the right way. But to move in that direction, you need your IT system in place and your people need to be schooled in it. But that is easy.”
Statia said however that while a strong IT system needs to be in place, tax credits can be implemented almost immediately for corporate taxation (which involves imposing a tax on the net income of a company).
The GRA Commissioner General said that tax credits for example, can be applied to the gold sector. Statia said that he has already discussed this matter with gold miners and “I think they are coming around to it as being the most ideal thing for them.”
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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