GRA tackling more than 80% of weaknesses identified by IMF

GRA tackling more than 80% of weaknesses identified by IMF – Statia

Jan 26, 2018 News

By Kiana Wilburg
The International Monetary

GRA Commissioner-General, Godfrey Statia

Fund (IMF) recently identified a number of weaknesses which exist within the tax systems of the Guyana Revenue Authority (GRA). But the entity’s Commissioner-General, Godfrey Statia, was pleased to report yesterday that more than 80 percent of those issues are being tackled. He noted, however, that sweeping changes will not happen overnight.
Statia said that it can take up to three years for GRA to smooth out the kinks in its systems.
During a press conference yesterday, Statia noted that it was GRA that invited the IMF to visit the authority and conduct an assessment of its systems. The tax boss said he told the team that GRA is not interested in sugar-coated words. He wanted the IMF team to be as outspoken as they could about the challenges facing the revenue authority.
In its report of May 2017, the IMF outlined GRA’s main strengths and weaknesses. The strengths included: a highly qualified cadre of staff, extensive information available to taxpayers through a variety of channels, withholding and advance payment mechanism in place, independent graduated dispute resolution mechanism and strong external oversight mechanisms.
The weaknesses highlighted were: no-segment based management of taxpayers, functional limitations of the IT system, Limited e-transaction system, lack of strategic and structured risk management approach, weak filing and payment compliance, de-centralized audit case selection process, absence of legislative tax rulings system and compliance improvement programme limited in scope and content.
Upon the receipt of the said report, the Commissioner-General said that a further request was made that another study be done to advise GRA on the next steps in modernizing the Authority. Statia said that this assessment was done in September 2017, a draft submitted in October, and a final report done in December.
The Commissioner-General said, “Suffice to say that many of the recommendations made by the team were either already work-in-progress, or envisaged to be implemented during 2018 and beyond.
The major recommendations of that assessment for January 2018 include: Produce monthly statements of total arrears and collectible arrears to inform debt management activities. Refocus and strengthen risk management by having a risk management unit gather and analyze information; and set and monitor selectivity criteria.
Also, ensure the GRA’s structure, capacity, capabilities, treatment, products and evaluation framework are focused initially for the large taxpayer segment.”
He continued, “In 2007, PricewaterhouseCoopers (PWC) also did a diagnostic study for the Authority which was sitting on the shelves, and never implemented. In 2017, upon a visit to Guyana, a PWC partner and a former colleague from the Trinidad and Tobago Internal Revenue, was on the team, and I was able to persuade her for PWC to do an update of the diagnostic study part with cost to GRA.”
Statia added, “This was completed in July 2017, and its findings were similar to those outlined in the IMF report. What stood out in their report, however, is the fact that GRA appears to be consistently under-budgeting revenue collection. GRA is aware that the tax base is larger than the tax collections, but under-budgeting masks the accountability of bringing the taxpayer base closer to reality by increasing taxpayer compliance or reducing tax avoidance or evasion.”
The Chartered Accountant also reminded that one of the leading causes of GRA’s problems or weaknesses is its poor IT system.
TRIPS
For almost 10 years, the GRA failed to implement critical parts of an IT system. The consequences of the entity’s actions in this regard only contributed to billions in revenue leakages and even rampant corruption.
Statia explained that the IT system referred to as, the Total Revenue Integrated Processing System (TRIPS), was intended to merge all departments by having a common database where all tax records could be scanned or entered into the system and found when needed. It was introduced with the aim of boosting efficiency in the assessment, collection and accounting for revenue.
TRIPS comprises two core applications: Taxes and Customs, which share information with each other and each application encompasses a total of 13 modules.
The Customs Modules include; Lodgment; Data Entry; Goods Inspection/Enforcement, Valuation and Document Check, Risk Profiling, Cashiering, Release, Remissions, and Warehouse.
The Tax Modules include; Taxpayer Identification, Tax, Accounting, Audit, Reports/Notices/Certificates.
Statia noted, however, that since all of the modules were not implemented, the “TRIPS system was just tripping.”
The Commissioner-General said that the Authority had been trying to implement TRIPS completely since 2007. He said disappointingly, that the entity spent over US$4M on the IT system and it is still not up to date.
Furthermore, the Tax chief said that the failure to implement all of the modules affected the entity to a large extent.
He explained, “In the olden days, it used to be a manual system and it worked up to a particular point. So you know for sure that if TRIPS is in place, the IT system would help you to do a lot of these things.
If you have the right IT software, half of your work is completed. You would be able to do proper audits and these things, and at the touch of a button you would be able to recognize what is wrong and what is right; whether a taxpayer has complied…”
Statia continued, “Unfortunately, you can’t do that with the present system, and that has gone on for the last 10 years. That was probably one of the reasons why the GRA has been in such decay…it was in a state of decay.”
He added, “What I did now is instead of them using an entire TRIPS, I said, ‘No. concentrate on the internal revenue modules.’ And we are going to go to the Automated System for Customs Data (ASYCUDA). That is what we are doing.”
Statia said that the ASYCUDA system will cost close to US$3M.
As for TRIPS, he sought to stress that “We must get something out of what we have paid for, so while we are moving to ASYCUDA for customs, we will keep (aspects of) TRIPS… In that way we would be able to turn up certain things faster. For instance, we expect that people must be able to E-file their tax returns for 2018…”
Statia added, “If TRIPS used to work you could have been doing all your applications online. So you could have applied for your compliance online… but in the absence of that, we will be exploring other things in its place.”
Additionally, Statia had updated the media on the ASYCUDA system stating that Cabinet has already given approval for the funds. The new programme is slated for implementation in a month or two.
“So with that new system you will reduce collusion and under-invoicing and you would get a smooth system,” the Commissioner-General said.