1000 taxpayers under review for unexplained wealth – Tax Chief

Mar 19, 2018 News

---

By Kiana Wilburg

Whether it is a politician or a businessman with the world of clout, nothing will stand in the way of the Guyana Revenue Authority (GRA) in going ahead with its audits on taxpayers who appear to have unexplained wealth.
In fact, Commissioner General, Godfrey Statia was able to confirm that there are at least, 1000 taxpayers under review.
In an interview with this newspaper, Statia said that he is very much aware of the concerns of citizens on this matter. He assured however that the revenue authority continues to look at the matter.
Statia said, “The GRA continues to look at the issue of taxpayers with unexplained wealth. This is not the first time GRA is doing this…There are various ways of finding unexplained wealth, one of which is where the taxpayer exhibits his wealth and that would call for a Net Worth Analysis. With this, you see how their wealth has grown over the years, expenses, gifts and donations and the necessary deductions are made.”
The Commissioner General noted that while this type of audit was done prior to his taking over the job, several checks revealed that those were done incorrectly. He explained that in some cases, it was clear that the audits were done incorrectly out of ignorance while others were a clear case of fear.

“Some that I checked, you saw the basis for doing it was incorrect…I keep lamenting that you need to train your staff and even the ones who knew how to do it they were afraid to do it because they were given mixed signals… Now, it is being done. They have gone full speed ahead…No taxpayer is exempt from this. Everyone must pay their rightful tax. Right now, there are at least 1000 taxpayers under review.”

DOUBLING COLLECTION
Chartered Accountant and former Auditor General, Anand Goolsarran has written extensively on the need for the Guyana Revenue Authority to step up its approach on unexplained wealth.
The Chartered Accountant said, “Suffice it to state that too many of these persons continue to flaunt unexplained wealth with impunity. There are also many large unincorporated entities for which there are no legal requirements to file audited accounts with the GRA. This poses significant difficulties when considering the tax liabilities of the owners these entities.”
On the other hand, Goolsarran said that while there is a requirement for incorporated entities to file audited accounts with GRA within a specified timeframe, and duly certified by chartered accountants in public practice, GRA must be more proactive in carrying out its own independent assessment as to whether these audited accounts do indeed reflect a fair presentation of the financial condition, performance and cash flows of these entities.
In other words, the former auditor general said that GRA must be prepared to challenge these accounts rather than accepting them at face value simply because they have been certified by chartered accountants.

IMF HIGHLIGHTS
Goolsarran also pointed to the fact that the International Monetary Fund (IMF), in one of its latest reports, highlighted that there were several weaknesses within the revenue authority.
In the area of verification of returns filed by taxpayers, the Fund noted several problems. It said that there was no automated cross-checking of internal and external information to detect and deter inaccurate reporting; no proactive initiatives to encourage accurate reporting; and no monitoring of the extent of inaccurate reporting in any of the core taxes.
In addition, the IMF found that GRA’s Customs Department was not used on a systematic basis to verify amounts reported for personal and corporate taxes. The need to monitor regularly tax revenue losses from inaccurate reporting was also highlighted, especially by business taxpayers, so that the necessary actions can be taken to ensure compliance. Accordingly, the IMF gave a D grade for this activity which is considered the lowest level of performance.
There was no system of public or private rulings nor were cooperative compliance arrangements in place to facilitate GRA’s clarification of tax issues. There was also no legal framework to support the issuance of binding rulings nor were there any compliance gap studies for Value Added Tax (VAT).

MOVING FORWARD
In the face of the aforementioned, GRA’s Commissioner General, Godfrey Statia informed this newspaper that efforts are already in place to correct such deficiencies.
In fact, Statia revealed that the IMF report was done based on his request. He noted that in 2016, a team from the Caribbean Regional Technical Assistance Centre (CARTAC) visited Guyana. The Commissioner General said that he asked the team to have a diagnostic study conducted on the revenue authority to ascertain its strengths and weaknesses in tax administration. Statia said he was later informed by the said team that such a study can be conducted by the IMF.
The Chartered Accountant said that a request was made to the IMF for the study to be done. The assessment was carried out in March and the report on the findings submitted to the revenue authority in May. The Commissioner General asserted that the IMF made recommendations based on its findings. He noted however that several of these suggestions for improvement were either already a work in progress or envisaged to be done next year.
Statia acknowledged that there is a manual system at GRA but noted that the very weaknesses regarding declarations exist because of an IT system that is not working effectively. He said that moves are already in the pipeline to correct this.
The Commissioner General said, “I am very much aware of the findings regarding false declarations. But let me say this, taxation is circular. What you miss at the customs part you ought to find at the VAT part and what you miss there you ought to catch it at the Income Tax part. In order to do that, it therefore means that all the information must be stored in a common database…for you to do that, you need a proper IT system.”
He continued, “IT systems are not only lagging at GRA but all over. GRA is now straightening up its IT system. Unless you have a proper IT system, you cannot cross check because everything is manually done; so if the IT system is not up and running you will have problems.”
Statia added, “What we have done is we have now started doing all the scanning of all the (Income Tax) Returns and all these documents that come in so by mid next year, when a man comes, he brings his original, the scanning is done there and then and fed into the system…There is no need for him to bring that back.”

---

---