“Zero-rated” removed to attain more equity, expediency in VAT regime – Commissioner-General

Commissioner-General of the Guyana Revenue Authority (GRA), Godfrey Statia was prompted in recent weeks to meet local manufacturers to allay fears in wake of Government’s 2017 agenda to remove “zero-rated” from a significant number of items for Value Added Tax (VAT) purposes.

The National Budget 2017 in which the removal of several  “zero-rated” items were announced was passed yesterday (Wednesday, December 21, 2016) in the National Assembly.

Meetings have so far been held with several organisations and companies and their representatives who were primarily concerned about the changes to the schedule.

He explained that this new direction was compelled by the need for more “equity in the system” since it was found to be replete with persistent failure by many VAT registrants to maintain proper records and unwarranted refund claims.

“We used to spend virtually eighty percent of our VAT resources on verification of refunds claimed by manufacturers/sectors. By moving certain items from being Zero-Rated to exempt, we do not have to do that anymore. It means that our staff could now concentrate on enforcement, audit and compliance activities and paying over the VAT collected.” Mr. Statia had noted in a December 16, press conference.

The meeting with the stakeholders allowed the GRA to clarify the distinction between zero rated as against exempt and highlight the advantage which such a move is seeking to place local manufacturers.

‘Zero rated Supplies’ are those goods and services that are taxable but, for economic reasons, are taxed at zero percent (0%). Meanwhile, ‘Exempt Supplies’ are those that, for social or difficult-to-tax reasons, are not taxed.

The elimination of zero-rated items with the exception of exports and manufacturing inputs was announced in the 2017 Budget presented by Minister of Finance Winston Jordan. He also announced an increase in the VAT threshold from $10M to $15M to enable the GRA to exercise measures to ensure greater compliance.