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In just two years under PPP…Revenue loss from exemptions to companies almost $100B –Tax Reform Committee
It appears that tax incentives and holidays during the rule of the People’s Progressive Party
Chartered Accountant, Chris Ram
(PPP) were not only awarded in a very reckless manner to businesses, but without any review to ascertain what the nation was receiving in return.
In this regard, a comprehensive report that was prepared by the Tax Reform Committee (TRC) exposed that within the space of two years under the PPP rule, the revenue loss from exemptions to companies was almost $100B.
The Committee, which was established by the APNU+AFC regime, in its report sought to explain the scope of tax incentives and holidays in Guyana, while noting the revenue loss for those areas.
With respect to incentives, the Committee explained that these are typically provided to companies and businessmen, in the expectation that they would lead to greater volumes of investment and re-investment, than would otherwise be the case.
The Committee noted that the incentives may relate to both foreign and local investors. It said that these can be designed to be more generous, depending on the expected benefits, in terms of level of investment, number of jobs to be created, the vintage nature of the technology to be transferred, the number of employees to be trained, etc. The Committee said that the latter conditions may be expressly stated in the form of performance requirements for the receipt of the incentives.
In addition, the Committee commented that the types of incentives may comprise exemptions of various sorts, such as customs duties, value added tax (VAT), and excise taxes. It said that customs duties are concentrated in fuel products, industrial inputs and passenger cars; VAT in industrial inputs; and excise tax in fuel products and passenger cars.
GRA Boss, Godfrey Statia
The committee also noted that there are investments and accelerated depreciation allowances, along with Export-Processing Zone (EPZ)-type infrastructure facilities, and the incentives mix, which may depend on whether the economic activity is included in the incentives legislative and regulatory framework. Besides the aforementioned exemptions, the TRC said that the other major incentives tool relates to the granting of tax holidays.
Based on data provided by the Guyana Revenue Authority (GRA), the Committee pointed out that companies/businesses accounted for about 78 per cent of the total value of exemptions, in terms of revenue lost to the national treasury in 2014. The Committee said that the types of exemptions responsible for the revenue loss related to customs duties, VAT, excise taxes and stamp duty foregone.
The Committee said, “Revenue loss would also pertain to the granting of tax holidays. Because of the failure to comply with the requirement in the Investment Act for an audit of tax holidays granted and the laying of the report thereon in the National Assembly, it is not possible to determine the revenue foregone in the granting of tax holidays in Guyana.”
The Committee continued, “The entities that are involved in the granting of tax holidays are GO-Invest,
NICIL Chairman,
Dr. Maurice Odle
the Guyana Revenue Authority and the Ministry of Finance. However, it does not appear that there is any mechanism in place for any post-approval audit or review.”
It added, “For the year 2014, the revenue loss from exemptions, alone, relating to companies/businesses was equivalent to $43.2 billion, and for all beneficiary categories, $55.6 billion. In 2015, the revenue loss from exemptions alone, relating to companies/businesses, was $56.6 billion.”
Additionally, the TRC said that the total corporate tax remissions/exemptions were equivalent to 31 percent of Central Government tax revenue and exceeded actual corporate tax revenue in 2014.
The Tax Reform Committee was established in August 2015. It was chaired by economist, Dr. Maurice Odle, and included tax specialists such as Christopher Ram, GRA Boss Godfrey Statia and Dr. Thomas Singh.
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