Businesses may be ignorant of the specific changes to VAT law
Kaieteur News – The Senior Minister in the Office of the President, Dr. Ashni Singh, has called on the Guyana Finance Authority (GRA) to take action against those unscrupulous individuals who still charge zero value tax (VAT) on zero-rated items. It has also expressed concern about the rise in the prices of items for which the VAT has been written off.
However, the government’s rating of VAT on some household necessities leaves much to be desired. In his Budget speech, Dr. Ashni Singh said that the government was reclaiming VAT on the basic necessities of formerly zero-rated homes at the time the PPP / C dismissed office in 2015. He said these items include basic wheat flour, basic bread, oats, unsalted crackers tastings, biscuits, cooking oils, bed sheets and pillowcases, toothbrushes, etc.
These are the etcetera that provide a gray area. The APNU + AFC had incorrectly set VAT on a range of household necessities, and now that the PPP / C is determined to eliminate the VAT on these items, the public needs to know specifically the items for which VAT now at zero rate.
On its website, the GRA has a list of zero-rated items. But how many businesses would go to that website to study Section 17 of the Value Added Tax Act and then to explore which items have now become zero? Some businesses may not be aware of the wide range of household necessities that are now zero-rated or previously zero-rated.
Consumers may also be aware that white and whole wheat bread attracts zero VAT but may not know that French bread, Swiss bread and sweet bread attract VAT. They may know that baby formula, diapers, sanitary napkins and panty liners are zero-rated but do they know that cheddar cheese is also VAT-free? Locally produced clothing, bed sheets and pillow cases are zero-rated for VAT. But how many people know that shelf covers and blankets are also zero-rated? Many know that fresh fruit is zero-rated but how many know this excludes apples, grapes, dates, prunes, plums and berries?
Many non-importer retail businesses may not know these things and may inadvertently apply the VAT. So not all businesses are unscrupulous.
A special public education program should be undertaken, targeting businesses and consumers. This should be done by the Ministry of Tourism, Industry and Commerce in conjunction with the Ministry of Finance and the Guyana Finance Authority. This is all the more necessary given that the PPP / C reverses all those taxes imposed by the APNU + AFC on consumers. One of the problems businesses face is that if they don’t use the VAT, only to find out later that GRA finds they should get it. These businesses will then have to pay the very VAT they did not collect from the consumer.
But Dr. has. Singh his problems too. The Ministry of Tourism, Industry and Commerce should advise that some of the measures it announced in the 2021 Budget contravene the World Trade Organization’s General Agreement on Tariffs and Trade (GATT) and the Caribbean’s Single Market and Economy (CSME).
The GATT provides that: “The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or any internal payments of any kind, in excess of ‘ r those directly or indirectly applied as domestic products. ”
The same agreement states that: The products of the territory of any contracting party imported into the territory of any other contracting party shall be treated no less favorably than that given to similar products of national origin in respect of all laws, regulations and requirements affecting their in-house sale, offer for sale, purchase, transportation, distribution. ”
These provisions of the GATT are known as national treatment and MFN treatment. They prohibit giving choices to local goods such as imported items. The Chaguaramas Revised Agreement, in turn, requires the removal of measures aimed at protecting domestic production or that include discrimination on the basis of territorial origin.
In the Budget of 2021, the Minister announced some measures that appear to violate national treatment under GATT and the above principles of the Revised Chaguaramas Agreement. These measures include zero-grade building stone imported from CARICOM, locally pressed concrete piles, locally made lightweight steel beams for construction, locally manufactured roof and PVC products for construction. These measures are likely to be successfully challenged in our courts and the Caribbean Court of Justice as discriminating against similar imported products.
No one will want to say that the person who piloted these measures did so with bad intentions. Equally, businesses found to be charging VAT on zero-rated items should not be assumed to be unscrupulous. Some may not know the specific changes to the country’s tax laws resulting from the Budget measures. Just as the government might not have known that it only gets zero rate of VAT for certain types of domestic production!
(The views expressed in this article are those of the author and do not necessarily reflect the views of this newspaper.)