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Government to get IMF help to review VAT – Finance Minister
The Government of Guyana (GoG) will be getting assistance from the International Monetary Fund (IMF)’s Caribbean Regional Technical Assistance Centre (CARTAC), to conduct an assessment of the country’s current 16 percent Value
Minister of Finance, Winston Jordan
Added Tax (VAT).
Minister of Finance, Winston Jordan, made this disclosure, yesterday, at a press conference at the Finance Ministry, in Georgetown yesterday.
VAT will eventually be reduced, he said. However, the government is looking at it in a careful manner.
The government’s Tax Reform Committee (TRC), earlier this year had made several recommendations with regards to the reduction of the Value Added Tax. These proposals include that the VAT should be reduced from the current 16 percent to 14 percent with an intermediate rate of seven percent added.
Quizzed on why the administration has made no move to implement this recommendation, Jordan stated that the recommendation that was made by the committee is “nothing new”.
“It merely follows on the promise that the government had made to reduce VAT. Now there are various options for reducing this VAT. What we will want to do is to have the widest possible consultation because some of the options will involve putting the VAT on some things that could cause trouble,” he said.
He added that by making a reduction, the government will have to expand the base – remove the VAT exemptions from some items – on which the VAT is applied, so as to recoup revenue-loss as a result of the reduction.
The CARTAC team, he said, is expected to arrive in Guyana shortly. He said that the team will not only conduct the assessment, but also carry out the quantitative work of Guyana’s Tax Reform Committee and make recommendations for the way forward on VAT.
“They (CARTAC) are going to send a one or two-person mission to do a complete assessment of our VAT, where it is today including options for changes into the system so it is on the cards. I don’t see it happening before the next budget. It would be extremely difficult to just bring in a VAT reduction in the middle (or) half of the year as such, when our budget anyhow, is not based on that,” he said.
During the 2015 General Elections, A Partnership for National Unity + Alliance for Change (APNU+AFC) Coalition, had promised to reduce the VAT.
VAT was introduced on the January 1, 2007 in Guyana as part of the then Government’s plan, to modernise and streamline the taxation system.
The concept of VAT was invented in the 1950s. It is now in operation, in one form or another, in more than 120 countries worldwide.
Meanwhile, countries in the Caribbean region face similar problems in meeting the standards of economic and financial governance expected of them by their citizens, and by domestic and international investors.
CARTAC was created to help develop skills in the specialized areas required to design and implement measures to meet these standards at both the national and regional levels.
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