GRA clarifies VAT on milk: April 27, 2007
Recently, there have been concerns about milk zero-rated for Value Added Tax (VAT) as expressed in the letter columns of the daily newspapers -most recently-the Kaieteur News of April 27, 2007 under the heading “VAT on milk?”    

Schedule 1, paragraph 2 (q) (v) of the VAT Act zero-rates “cow’s milk and milk powder, but not including other milk such as flavored milk”.

The VAT Department re-emphasizes that no VAT is to be charged on cow’s milk whether in box, cans or bags once it is not flavored milk (strawberry, banana, chocolate etc.).

The position adopted by the GRA is that evaporated milk, liquid cow’s milk inclusive of Ultra High Temperature (UHT) milk and fully or partially skimmed milk are forms of cow’s milk and, as such, along with powdered milk (skim and full cream) are zero rated. 

The department has taken the position with the understanding that while most milk including evaporated and UHT milk go through a process to reduce the fat content, prolong shelf life or in some instances, where naturally occurring vitamins (A, D, E and K) have been lost through the reduction of fat, to reintroduce such vitamins, they are essentially cow’s milk.

Condensed milk, on the contrary, falls into the category of flavored milk and is, therefore, subject to VAT.

Importers, wholesalers and retailers are urged not to charge VAT on milk, regardless of the brand and added vitamins, except where the milk is flavored.

The GRA remains committed to working with stakeholders to ensure VAT is effective and that there is maximum compliance with the law so that Guyanese enjoy the real benefits of VAT.
                      
Persons who still have queries with respect to VAT are encouraged to write to the Commissioner, VAT and Excise Tax Department, for clarification.