Budget 2017...Contractors to pay 2% Withholding Tax on every transaction

Budget 2017…Contractors to pay 2% Withholding Tax on every transaction

Nov 29, 2016 News

After years of falling under the radar, it appears that contractors will be made to comply with their taxes.
During his budget presentation yesterday in the National Assembly, Finance Minister Winston Jordan announced measures for Government to collect a two percent Withholding Tax on the gross payments made to all contractors.
“The two percent shall be deducted from every payment made to contractors by contractees and shall be remitted to the Guyana Revenue Authority. The amounts deducted would be allowed as a credit against the final taxes payable by the contractors,” Jordan said.
In current arrangements, contractors would wait to submit their annual returns before remitting payments. Not so anymore. The client will have to take out that two percent of the entire amount and send the payments to GRA.
Many contractors have been paid under the table; many of them are in loose arrangements that see little recourse for the client. Several state contractors have also been managing to get away with paying little taxes, using the loophole of asking for temporary compliance certificates from GRA, but afterwards not paying their correct taxes.
Meanwhile, in another announcement, Jordan said that Government is repealing a section of the
Income Tax Act as it relates to the sale of gold or diamonds not being taken into account in ascertaining the chargeable income of the persons who owned gold or diamonds.
The administration is also planning to restrict the Mortgage Interest Relief to loans up to $15 million. “This measure will ensure that only low to middle income earners benefit, as was intended,” the minister said.
The relief was introduced a few years ago by the previous administration as a means to help new homeowners to benefit from reduced taxes on their mortgage loans. However, there have been reports of persons taking mortgages in excess of $15M and still benefitting.
The relief was supposed to benefit the working class.

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