Forensic audit shows…State lost $70.5M in export duties from Scrap metal unit over 3 ½ years

May 30, 2016 News

A special investigative report into the controversial Scrap Metal Unit has been released, showing that over a period of three and a half years, the Guyana Revenue Authority (GRA) failed to collect duties for scrap metal exports, resulting in losses to the state of over $70M.
According to the final audit report on the unit, done by Ram and MacRae Chartered Accountants, the Customs Act does not specifically exempt export of scrap metal from the export duty. The auditor stated that the Act requires that the general rate of 1.5% should be applied.

Former Commissioner General of GRA, Khurshid Sattaur

“However, while the GRA is involved in the process of facilitating export it did not collect export duty on scrap metal exported during the period under review,” the auditors noted in the report. “Had the rate of 1.5% been applied, the export duty for the period would have been$70.5M.”
According to the auditors, the value for each shipment from 2011 to 2015 was calculated using detailed information provided by GRA. And though he arrived at a total customs value of $4,702,126,640, the auditor observed that even this could be an understated value.
“It is not recommended that GRA seek to recover these sums since any such effort is likely to meet
with legal challenges,” the auditors observed. “We recommend however (that henceforth) all revenues eligible are collected and the law applied.”
This will represent a poignant example of what GRA Chairman Rawle Lucas recently described as revenue collection not matching the observed levels of economic activity in specific areas. GRA not collecting the revenue it should is a concern that Minister of Finance, Winston Jordan, also observed.
Longstanding Commissioner-General of GRA, Khurshid Sattaur, was fired from the tax agency under a cloud earlier this year, after being sent on accumulated leave. Officials also visited his home to reclaim items belonging to GRA. GRA is expected to be the subject of a crucial forensic audit this year.

Examples of the scrap metal trade in Guyana

The report has also highlighted that despite paying its Inspectors, Enforcement Officers, drivers and administrators sums totaling $43.1M for the period reviewed (2011-2015), deductions for Pay As You Earn (PAYE) and National Insurance Scheme (NIS) contributions were never made by the unit.