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Govt. loses $342M reversing VAT on educational services

Nov 28, 2017 News

Under immense public pressure, Government is proposing to reverse the 14 percent Value Added Tax (VAT) on educational services, which was implemented at the start of year.
Minister of Finance, Winston Jordan, during the 2018 budget presentation yesterday, told the House of Assembly that in Budget 2017, as part of efforts to widen the tax base, services provided by private educational institutions were standard rated, while educational supplies previously zero-rated were exempted from the payment of the VAT.
“In view of the representations made, I propose to remove the VAT on the provision of all educational services, with effect from January 1, 2018,” Minister Jordan told the House.
He said the potential revenue loss is $342 million.
According to the Minister, at the same time, efforts will continue by the Guyana Revenue Authority to ensure that these institutions become tax compliant.
Government had insisted on imposing the VAT on educational services in spite of protest action and a petition against it since it directly increased private school tuition fees
Despite the many concerns, Government is reportedly not prepared to reverse this decision.
According to information disseminated by Government, the majority of the 50-odd private educational institutions in operation have over the years failed to pay taxes and Government had expressed a willingness to waive the 14 percent VAT on the tuition fee if the private schools decide to comply with taxation laws.
Minister of Finance, Mr. Winston Jordan had related that while Government was desirous of lowering the 14 percent VAT implemented by the previous administration it was forced to institute the VAT on education in order to widen the tax base.
Up until December, the imposition of the VAT on private tuition fees falls on the payer (that is the parents of students attending these institutions) rather than the payee (the owners of the educational institution).
As of 2016, there were 54 private education institutions registered with the Guyana Revenue Authority, and according to Minister Jordan, few of these “were tax compliant, including submission of yearly income and corporate tax returns.”

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