Taxation of Guyana’s informal economy very possible - Analysts

Taxation of Guyana’s informal economy very possible – Analysts

May 12, 2017 News

The informal sector consists of firms and individuals who are not fully registered and regulated, and therefore not in the standard tax net. It is therefore no surprise that taxation of the informal sector has posed problems for tax administrations locally, regionally and internationally.
However, some of Guyana’s leading tax analysts believe that it is quite possible to catch those within the informal sector and ensure they pay their fair share of taxes.
According to analysts such as Chartered Accountant, Chris Ram and Commissioner-General of the Guyana Revenue Authority (GRA) Godfrey Statia, this can be achieved through a combination of business registration and formalization, strengthening tax enforcement as well as investigations and penalties as a deterrence, and indirect taxation through a system of withholding and credits.
In a special tax report that was commissioned by the Granger administration, Guyana’s tax consultants said that since the decision about whether to formalize is usually based on costs (which can include higher taxes) versus benefits (the ability to stay under the tax radar by not so registering together with access to credit), formalization alone will not have the desired effect; hence the proposal of a system of presumptive taxation to bring these individuals into the tax.
“We propose the use of presumptive taxation for specific trades, and difficult to tax, unincorporated and informal businesses such as minibuses, taxi services, trucks, etc… We also propose that the duty free taxes on fuel be removed and replaced by a system of credits, for example, for gold miners, upon submission of gold to the Gold Board.”
The tax analysts also proposed that more resources should be devoted to the access of third party information, and that the timely submission and utilization of contractors’ information should be enforced by the Authority.
They also noted that the presence of TINs (Taxpayer Identification Numbers) on contractors’ submissions will enable for improved enforcement and compliance.

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