Private sector bodies want Gov. to rethink new VAT policy  

Several private sector organisations including; the Private Sector Commission of Guyana, Guyana Manufacturers and Services Association, Georgetown Chamber of Commerce and Industry Limited, Guyana Rice Exporters and Millers Association and Guyana Forest Products Association are calling on the Minister of Finance, Winston Jordan not to disallow exporters the right to reclaim the Value-Added Tax paid on inputs used to produce goods and services to be exported from Guyana. Such refund claims were allowed since 2007 when the Value-Added Tax was introduced. In a statement the organisations noted that the Government and the GRA have been ill advised and calls the measure counterproductive to the economy.

 The organisations noted that the GRA is conflating two amendments, neither of which supports the interpretation and advice offered by the GRA to the Minister. Most significantly, in the process, the GRA is causing the Minister to reverse an undertaking given to the National Assembly in January 2018 that “None of these proposed amendments will negatively affect any individual or business.”

 The bodies is contending that as a consequence of denying VAT refunds, is that the exporter must either absorb the VAT, which can make their operations lossmaking, or seek to recover these losses by increasing prices for their exports of the goods and services, making them uncompetitive, “our members have asked us to remind policy makers that while the margin in the trade for their goods and services internationally are often small, it yet allows those exporters the opportunity to offer competitive prices on the domestic market. We therefore consider that should the Government proceed with this policy, the country, the economy, the exporters and consumers will suffer,” the entities noted.

At a time when the Government should be encouraging the export of products to earn foreign exchange and to avert the Dutch Disease and a “one-horse economy”, the measure will negatively affect the following products, among others:

Raw brown, white and parboiled rice; paddy; raw brown sugar; vegetable, corn or coconut cooking oil; fresh fruits and vegetables; plywood, logs and construction lumber; raw gold or diamonds; sanitary napkins; bleach, soap powder and soap; ice used in the fishing industry; uncooked fresh, chilled or frozen chicken; fresh, chilled or frozen pork, beef, shrimp, prawns and mutton; fresh, chilled or frozen fish, salted fish; raw gold or diamonds, the sectors said.

“It would be superfluous to note that, as the Minister of Finance stated in his 2018 Budget Speech, he anticipated increased deficit in the merchandise trade by US$140 million and a decline in the current account. We note too that the sectors affected by this purported policy reversal not only account for a significant share of merchandise exports but also of foreign exchange earnings and the employment of labour. Our organisations and members submit that the purported policy will exacerbate an already bad situation – destroying businesses, industries and jobs – which the Government would clearly wish to avoid, particularly having regard to the prevailing weak performance of the economy,” the bodies noted in a statement.

The policy will also affect collection from Income Tax and Corporation Tax since the absorption of the input tax will reduce taxable profits and therefore tax revenues. More fundamentally however, it is already affecting the international competitiveness of the country’s exports and hurting a slowing economy, the agencies concluded.


Was This Post Helpful:

0 votes, 0 avg. rating


Leave a Comment