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Khurshid Sattaur
Commissioner General
Mission Statement
Our mission is to promote compliance with Guyana’s Tax, Trade and Border Laws and Regulations through education, quality service and responsible enforcement, thereby contributing to the economic and social well being of the people of Guyana. |
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Nadia De Abreu
Director - Corporate Communications Unit
Tel: (592) 227-3680
ext 222 |
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GRA Commissioner-General says VAT in favour of businesses - as much as 40 % recovered in Input Tax Credit: December 6, 2007
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Commissioner-General of the Guyana Revenue Authority Mr. Khurshid Sattaur said he finds it very strange that businesses continue to agonize over the Value Added Tax (VAT).
The Commissioner-General’s statement came as a result of some expressions in the media about the alleged hardship VAT has caused on businesses, more so following GRA’s court actions.
According to Mr. Sattaur, GRA’s records show that VAT Registered businesses are earning far more profit than they did under the Consumption Tax regime.
“We have evidence that VAT registrants are recovering in excess of 40 percent of the VAT they collect from consumers as Input Tax Credit,” the Commissioner-General emphasized. “This was never possible before,” he added, “But this is what the VAT system offers them. How then can anyone allege that VAT has been putting onerous tasks on them?” Mr. Sattaur questioned.
VAT is providing businesses with a great benefit of cash flow which should result in higher profits and their ability to have increased levels of business activity than they are accustomed to, he said.
Mr. Sattaur reiterated that since VAT only targets businesses that have gross sales of $10M per annum, it is inconceivable how these businesses could not have any semblance of an accounting system with the requisite information on their business activities.
“This is most unpalatable,” he said. “What then were they using as the basis for filing their tax returns? Are these businesses leading the Commissioner-General of the GRA to believe that their returns did not reflect their true earnings yet they signed those statements and declared them as true and correct?” he asked.
He further questioned the basis on which they accounted to the government for income of sales when they were not issuing receipts if they had no accounting system.
He emphasized that VAT simply enshrines in the law acceptable business practices and since it is relatively large businesses that are in the system, they should not find it difficult to comply.
“I hope that those persons who are penning these letters in the media only speak on behalf of themselves and not all VAT registrants,” Mr. Sattaur stated pointing out that these unacceptable practices could not be tolerated in other countries.
Meanwhile on the issue of high prices the Commissioner-General said, “What is very disturbing, is for me to peruse records at the Customs as against the prices paid by consumers which are unjustifiably high.”
These high earnings are pocketed by businesses who contribute to the high prices by making exceedingly high profits at the expense of ordinary citizens who could barely afford it.
“Could you believe that in some instances businesses have as much as 500 percent profit? On this basis, I find it very disconcerting for VAT registrants to make such illogical claims about VAT,” he said.
“We are not denying the fact that some items would have experienced increased prices as a result of VAT. The few items that were previously free and 10 percent under the Consumption Tax regime no doubt would have increased. However the most any item could have increased directly as a result of VAT was 16 percent. We are seeing increases far in excess of 16 %. Such increases cannot be attributed to VAT,” he disclosed.
There is the other factor of increased cost for some commodities on the world market; however, that alone too cannot give rise to the astronomical increase in prices Guyanese are experiencing.
The Commissioner-General further referred to an Economic and Financial Review done by the Eastern Caribbean Central Bank in 2002 which stated that, “In countries where VAT was introduced, there were higher rates on inflation generally associated with the higher dependence on indirect taxes and the process of shifting the burden of indirect taxes to the consumers. Ignoring variations in price and demand elasticities, it is generally argued that price rises by the net effect of the VAT (which rarely occurs). The impact of price is further complicated as businesses may take the opportunity to increase prices for reasons not associated with the VAT.”
“My view is that it is the greed of businesses that are using the VAT as the scapegoat,” Sattaur opined.
The GRA boss feels that businesses should have been glorifying the VAT since they were the ones who were calling for the disbandment of the C/Tax because of its inefficiencies with the rationale that it would make them more competitive and give them the opportunity to expand their operations and improve their earnings, which would also have translated to lower prices to consumers.
“I am therefore very troubled to see businesses capitalizing on their profits to the detriment of consumers,” Mr. Sattaur lamented.
He noted that when GRA’s computerization is fully operational, it is hoped that businesses who are now enjoying their unscrupulous profits, will not hesitate to pay their fair share of taxes.
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