Finance Minister, AG ignored laws on disclosing, auditing, tax concessions - Chris Ram

Finance Minister, AG ignored laws on disclosing, auditing, tax concessions – Chris Ram

May 08, 2015 News

Chartered Accountant, Christopher Ram has lashed out at the Minister of Finance, Dr. Ashni Singh and the country’s Auditor General, Deodat Sharma for having failed, over several years, to adhere to the country’s investment laws.

Chartered Accountant, Christopher Ram

Ram was referring specifically to the sections of that Act which call for transparency surrounding the monitoring and disclosure of tax concessions granted to foreign and local businesses annually.
Ram emphasized that both financial officers have ignored their statutory duty and stressed that this needs to change in the new era of governance.
The lawyer said that Sharma has been pressured on several occasions to report on the tax concessions as stipulated by the country’s tax laws, but he has continuously turned a blind eye to the issue.
Guyana’s Investment Act, Section 38 (1) states that the Auditor General, or any suitably qualified person, designated by him for the purpose, shall annually carry out a procedural or process audit of incentives granted under section 2 of the Income Tax (In Aid of Industry) Act to an investor or an investment enterprise.
It goes on to state that the report of the audit carried out , shall be laid in the National Assembly within six months after the end of each financial year. This has never been done .
Further, Section 37 of the said Investment Act says that the Government shall publish in the Gazette, information regarding all fiscal incentives granted under section 2 of the Income Tax (In Aid of Industry ) Act.
Given the failure of both Dr. Singh and Sharma to respect and obey the country’s laws, the Chartered Accountant said it becomes imperative for the whole matter of tax concessions to be part and parcel of the tax reform process with the aim of minimizing the cases for which exorbitant concessions are granted in an ad hoc fashion.
He said that the rules need to be made tighter and applied across the board. In doing this, the lawyer asserted that the country would stand to benefit more from greater revenues.
A Partnership for National Unity plus Alliance For Change (APNU+AFC) has been over the last week , highlighting the “ad hoc” manner in which Government seems to be handing out tax concessions and tax holidays to foreign investors and local businessmen.
These criticisms are on the front burner again given the recent deal struck between Government and a local contractor. That contract signed by Cabinet Secretary, Dr. Roger Luncheon and Faisal Mohamed of Dax Contracting Services sees the latter party receiving billions of dollars worth in concessions.
The opposition has also highlighted the controversial Marriott Hotel which has been the recipient of extravagant tax holidays and tax breaks similar to Dax.
Given the aforementioned “concession-trend”, the party has concluded that the People’s Progressive Party/ Civic (PPP/C) grants concessions in three packages: Gold, Silver and Bronze.
One of APNU+AFC’s financial advisors, Jaipaul Sharma, had said, “The gold package is the first-class tax concessions that Government grants through the Finance Minister, Dr. Ashni Singh to its family and best friends.
“The silver package is for party members and the bronze package represents the tax concessions that are given to its supporters.”
Sharma, an accountant, had also stated that he is disgusted at the manner in which Government discriminates when it comes to investments.
Ram, in sharing his views on the matter had said that should the APNU+AFC assume office, it would be wise for it to look at a few things relating to tax concessions.
Ram said that the discretion given to the Finance Minister to be the final check point for the approval of concessions needs to be reviewed.
He had said that the secretive manner in which tax concessions are treated needs to be rejected immediately. The new government should deal with it in an open manner, forthwith.
“The decisions to grant tax concessions should not be left to the Finance Minister alone. We should have some strict rules regarding concessions and tax holidays and those should be incorporated into the law.
“The regulations need to provide for a strict review process and failure from certain companies to meet the relevant terms and conditions attached to the tax breaks should lead to automatic suspension and or revocation of the tax concessions granted to them by the Ministry of Finance,” Ram added.
According to the Fiscal Incentives Institutional Framework for Investment, incentives are supposed to be granted in such a manner that they foster and promote a suitable investment climate for both local and foreign investors.
The document says that Government’s commitment to investment is also set out in the Investment Act (No. 1 of 2004), which was crafted – “…to stimulate the socio economic development of Guyana, and to attract and facilitate investment.”
APNU Executive Member, Carl Greenidge had argued that tax concessions are supposed to be granted in a transparent manner and one that promotes the adherence to international best practices regarding investment.
He stressed that based on how government operates, as is evident in the case with its recent “Dax Deal”; favouritism plays out when giving out tax breaks and holidays to entrepreneurs. He said that this inevitably leads to unfair competition in the market place as well as the death of certain companies which did not receive similar tax breaks.