GRA takes over 30 private institutions to court over non-payment of tax

Jan 26, 2018 News

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Some 30 schools were last year taken to court for the non-payment of tax.
This was yesterday amplified by Commissioner-General of the Guyana Revenue Authority [GRA], Mr. Godfrey Statia, during a press conference.
“I think I took about 30 of them [schools] to court last year for not filing their Pay as You Earn [PAYE]. They take out the tax from the teachers’ [salaries] and don’t pay it…In November every single educator, except about six persons, we took to court for non filing of their returns.”
When asked to comment on the institutions that have defaulted, Statia made it clear that “…it is a matter of court records, just go and check and see.”
The PAYE system is a method of paying income tax and national insurance [NIS] contributions. This system requires that the employer deducts the tax and NIS contributions from employees’ salaries of occupational pension before paying their wages or pension.
Statia’s remarks on this state of affairs came even as he commented on the fact that although the Value Added Tax [VAT] was removed from education last year, the fees at private education institutions have not gone down.
“The tax on education has been removed but the fees haven’t gone down…the schools are collecting and not paying, and now that they don’t have to collect, they are still collecting,” Statia revealed yesterday.
In order to ensure that parents are well aware of this development, Statia said that the GRA will soon be disseminating a press release in which parents are asked to ensure that they are no longer required to pay VAT.
Fourteen percent VAT on the education had attracted the ire of many factions of society, some of whom had even engaged protest action to retaliate its implementation.
Back in March of last year Government had announced that it was not prepared to remove its introduction of VAT on education despite it being the subject of protest action and a petition against it.
However, following a subsequent Ministerial meeting, Government indicated its willingness to possibly review the instituted VAT on private education. This reportedly led to Government agreeing to engage private educational institutions about fees and taxes.
In late November during his budget presentation, the Finance Minister told the House that ““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.”
According to information disseminated by Government last year, the majority of the 50-odd private educational institutions in operation had over the years failed to pay taxes. There was speculation even then, that Government would have been willing to waive the 14 percent VAT on the tuition fee if the private schools decided 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. By so doing, he noted that Government was forced to tax items of goods and services that were not previously taxed.
The imposition of the VAT on private tuition fees, he said, fell on the payer [that is the parents of students attending these institutions] rather than the payee [the owners of the educational institution].
“The argument has been made, at least by Dr. Brian O’Toole [Director of School of the Nations], that some parents would not be able to afford it. Perhaps, this argument has some merit. But, is the solution the complete removal of the VAT or to find creative ways to overcome it?” Jordan had questioned.
In fact he’d asserted, “One such solution is the absorption of the 14 percent VAT by GT&T. Note carefully, in this case, that though it appears altruistic, the absorption merely represents a reduction in the payment of corporate taxes due by the telephone company.”
“A similar arrangement has been implemented by the CJIA, which has decided to absorb the VAT to be applied when parking at the airport. In like manner, the private educational institutions may wish to consider similar approaches,” the Finance Minister had underscored in his deliberation on the VAT issue.
He had revealed that prior to amendments, educational materials were zero-rated, meaning that private school providers had to claim a refund of VAT imposed on a wide range of school supplies. Now, all of these items have been moved to the Exempt Schedule, which means that no VAT is charged and none has to be refunded.
“Please note that the entire list of educational materials in the previous schedule has been retained in the new Schedule. This is important because there has been idle talk of geometry sets, dividers and textbooks, among others, now attracting VAT. This is totally false, as can be easily referenced from the Exempt List that was published on a number of occasions in all of the dailies,” Minister Jordan had made clear.
As of 2016, there were 54 private education institutions registered with GRA and Minister Jordan had revealed that few of these, “were tax compliant, including submission of yearly income and corporate tax returns.”

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