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GRA needs to improve tax collection in mining industries, other areas
– Tax advisors
Some of the nation’s tax advisors are urging the Guyana Revenue Authority (GRA) to improve its efforts in the area of revenue collection.
They believe that there are still a number of areas such as the mining industries, where tax evasion is rampant.
According to tax advisors such as Chartered Accountant, Chris Ram, Economist Dr. Thomas Singh and NICIL’s Chairman, Maurice Odle, tax evasion continues to be a major issue that the GRA must work feverishly to stamp out.
In a comprehensive report, the team of tax experts said that tax evasion depends in part on the resources and efforts that the Government expends on the enforcement of existing laws.
The advisors said too much resources at GRA have been used up in activities not related to tax assessment collection, but rather on the issuance of compliances, manual data entry, and other issues unrelated to the collection of the rightful tax.
Going forward, the tax analysts recommended a number of areas which could be looked at.
SMUGGLING
One area which the tax experts pointed to was smuggling. The officials said that Guyana is subjected to major revenue loss from smuggling, not only because of its porous borders but, also, at its wharves and ports of entry.
They said that this is especially so for fuel, gold, cigarettes and alcohol, where there are ongoing allegations that collusion and corruption facilitate such tax evasion and revenue leakage.
Chartered Accountant, Chris Ram
NICIL Chairman, Maurice Odle
“Fuel markers are available on demand to fuel smugglers, gold mined in Guyana is exported and sold in Suriname because of lower royalty taxes, and smuggled cigarettes and alcohol are being sold in plain sight and on which no duty had been paid.”
“We understand that the GRA is in the process of acquiring a digital stamping programme for the latter two products at a substantial cost. It is crucial that the GRA avoids the experience of TRIPS which has failed to deliver on its promises and that it ensures that a proper assessment of all the features of programmes is examined and options and avenues considered and evaluated before entering into any contract.”
The tax experts added, “In areas of smuggling, it is known that producers and distributors have a vested interest in reducing such activity, since it reduces their bottom line and, ideally, such parties should have been requested to cooperate with any such a design, rather than having it trusted upon them, as they would be responsible for its implementation.”
The officials said it is recommended that GRA hold consultations with all the players in the field. They said too that it is known that digital stamps “in plain sight” are more easily forgeable, than digital markings when so placed in the packaging by producers.
COMPLIANCE CERTIFICATES
The process of issuing tax compliance certificates is another area of concern for Guyana’s tax advisors, especially in view of the potential for major leakages of revenue.
On the basis of the existing laws, policies and procedures, the tax experts said that all a taxpayer has to do is to file tax returns, pay whatever small amounts of taxes the taxpayer chooses to declare and request a tax compliance certificate.
They said that the certificate is issued indicating that the taxpayer has complied with all tax obligations.
In this regard, the officials said, “This is without any audit or verification of the correctness and validity of the tax returns, particularly in relation to the very small amounts of taxes declared and paid. Whatever declarations are made are accepted without question or verification, this leading to revenue leakages.”
They subsequently recommended the removal of the tax compliance certificate requirement for motor vehicles and for tender submission and for transports and titles in 2017.
MINING INDUSTRIES
Furthermore, the tax officers said that attention must be given to the gold and mining industries where there are reports of large scale smuggling and money laundering activities.
The officials said that tax officers rarely audit these activities, mistakenly believing that the 2% payment is enough, and indeed the gold declared resulted from the working of claims, rather than from purchases, and sold to the Board as a way of cleaning.
They said that the Guyana Geology and Mines Commission (GGMC) and GRA officers should therefore work together in this exercise.
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