Govt. companies should not retain bulk of profits - Tax advisors

Govt. companies should not retain bulk of profits – Tax advisors

Apr 01, 2017 News

Chartered Accountant,
Christopher Ram

Given the manner in which some Government companies were used in the past as parallel treasuries, several tax advisors are recommending that sweeping legislative changes must follow.
Elaborating further on this point was the Tax Reform Commission which was established by the Granger Administration.
The Commission said that it is recognised that moneys collected by the Guyana Geology and Mines Commission (GGMC), for example, are indeed collected under existing laws by what were once departments of the Government.
The Commission which prepared a detailed report on the matter said that these have become statutory bodies and there has been a debate about whether these are required to be paid into the Consolidated Fund under Article 216 of the Constitution.
The Commission however proposed that the Fiscal Management and Accountability Act be amended to require the statutory bodies and Government Companies, as defined in the Companies Act, to retain no more than 25 percent of the after-tax profits of the entity and to pay over to the Minister of Finance not less than 75 percent of their after-tax profits for any one year in the form of interim and final dividends.
Chartered Accountant, Christopher Ram, who was part of the Commission, said that the idea behind the proposition is hinged on the fact that entities such as the National Industrial and Commercial Investments Limited (NICIL) are just agencies of the state and their moneys should go into the Consolidated Fund.
He insists that these Government agencies should not be allowed to keep more than is necessary.
Over the years, NICIL has been notorious in holding onto billions in profits belonging to the state.
In 2012 for example, NICIL earned almost $7B in profits, but paid over just $1B to government.
Furthermore, a forensic audit into NICIL revealed that $26B was kept out of the Treasury.
The entire sum will however be transferred to the Consolidated Fund in a phased manner.
Some $6B was also being held by the Guyana Geology and Mines Commission which was not transferred to the Consolidated Fund. Kaieteur News understands that the process for transfers has already begun.
As for the forensic audit launched into the Environmental Protection Agency, Junior Finance Minister, Jaipaul Sharma who is in charge of the audits, revealed that the entity was holding some 15 accounts with millions of dollars.
The monies total over $400M. Recommendations were made for the monies to be transferred to the Consolidated Fund.
The Forensic audit revealed that the agency was apparently receiving monies from various agencies and opening a new account every time it received large sums. Sharma explained that the agency should not have done that.
He said that it should have held one account and categorized its expenses.
The Environmental Protection Agency was established on World Environment Day, June 5, 1996. It was on this date that the then Acting President of Guyana, Samuel Hinds, assented to Environmental Protection Act (No 11, 1996).
The Act mandates the Agency to oversee the effective management, conservation, protection and improvement of the environment.
It also requires that the Agency takes the necessary measures to ensure the prevention and control of pollution, assessment of the impact of economic development on the environment and the sustainable use of natural resources.
The Agency’s work enables Guyana to contribute to global and national environmental protection and conservation. As part of its work, the EPA implements education, regulation and enforcement programmes and uses partnership and collaborative approaches to strengthen the impact of its interventions.