‘Professionals are among biggest tax cheats’

Mar 24, 2022 News

---

– Revenue collection for lawyers, doctors, others dwindle annually – Audit Report

By Rehanna Ramsay

Kaieteur News – Tax evasion among professionals is on the rise with reports from Auditor General (AG), Deodat Sharma, documenting a decline in the amount of fees collected by the Guyana Revenue Authority (GRA) from this category of taxpayers, annually.

In accordance with the first schedule of the Income Tax Act, Chapter 80:01, professionals such as accountants, auditors, legal practitioners, medical practitioners, architects, dentists, optometrists, engineers, veterinary surgeons, physiotherapists, pharmacists, surveyors and preparer of returns are all required to acquire a Tax Practice Certificate from GRA.
Under that section, professionals who practice privately for reward are required by law to be the holder of a Tax Practice Certificate, which is valid for one year commencing January 1 and ending December 31. The tax practice fees are to be paid to the GRA by the end of February every year. However, the AG’s annual reports from 2017-2020 have recorded dwindling figures for professionals filing for Tax Practice Certificates. According to the report, the GRA continues to experience difficulties in having practicing professionals to comply with Section 37, Chapter 81:01 of the Income Tax Act.
The report for 2017 documented that the total revenue collected from professional fees for the period January to December amounted to $5.6M or 0.01% of the total revenue collected by Internal Revenue Department in 2016. The audit report went on to point out that as at 31 December 2017, there were 605 active registered professionals in the database of which only 260 professionals or $43% purchased professional certificates.

“As a result, 345 or 57% of the active professionals had not purchased professional certificates,” the report added.
As for the period January to December 2018, professional fees amounted to $5.121M or 0.01% of the total revenue collected by the Internal Revenue Department when compared to 2017 collections for the same period. In 2019, the total revenue collected from professional fees for the year amounted to $4.911M or 4.47% less of the total revenue collected by Internal Revenue Department for the previous year. At the time of reporting in September 2019, the AG report noted that 170 professionals paid for certificates after the stipulated date.
Similarly, at 31 December 2019, there were 688 active registered professionals in the database of which only 252 professionals or 37% purchased the professional certificates. As a result, 436 or 66% of the active professionals did not purchased professional certificates.
In 2020, the total revenue collected from professional fees for the year amounted to $3.930M, or less than 1% of the total revenue collected by Internal Revenue Department in the previous year. As at 31 December 2020, there were 731 active registered professionals in the database, of which only 291 professionals or 39.81% purchased the professional certificates.
As a result, 441 or 60.33% of the active professionals did not purchase the professional certificates, as compared with 2019, where 436 or 66% of the registered professionals did not purchase professional certificates.
Additionally, the audit report for this year noted that despite the constant decline in professionals complying with Section 37 of the Tax Act, the GRA failed to conduct any field visits to reinforce compliance. In the report, Commissioner General of the GRA, Godfrey Statia indicated that continuous efforts will be made to put in place measures to help curb this situation. Statia noted however that this is a work-in-progress.
“…Please note that these measures require additional human resource which is not currently available. The consistent dip in collections over the years may be attributable to less persons taking out and or renewing their license and the contentious issue over the years engaging the attention of the court on the payment of practicing fees for the professionals, lawyers in particular,” the report quoted Statia as saying.
Statia noted too that due to the conservatory order which was granted in Court against GRA in 2003, a number of professionals failed to take out their Tax Practice Certificates and pay the rates required, thus revenue for professional fee would be negatively affected.
It was explained too that the Conservatory Order instituted in October 2003 is still restraining the GRA from assessing and collecting increased fees from all professionals and was still in effect and the matter had not been finalised.
Because of this Order, in 2017 the revenue authority was barred from collecting an additional sum of $53.895M. Similarly, the Authority was barred from collecting an additional sum of $55.290M in Professional Fees for 2018; and $77.329M in Professional Fees for 2019. At the time of reporting in November 2020, the matter was still engaging the attention of the Court. As such, the Audit Office recommended that the GRA pursues the Court matter to bring closure and to implement a new regime structure for the payment of professional fees to avoid the continuation of the non-payment of the increased fees.

---

---