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Guyana Revenue Authority GRA : Register For VAT Value Added Tax

Organization : Guyana Revenue Authority
Type of Facility : Register For VAT Value Added Tax
Country: Guyana

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GRA VAT Value Added Tax

Value Added Tax (VAT) was introduced on the January 1, 2007, together with an Excise Tax (ET) on motor vehicles, petroleum, tobacco products and alcohol. VAT along with ET has replaced six (6) existing taxes, including Consumption Tax.

Related : Guyana Revenue Authority GRA Customs Declaration & Licence Transaction Checker :

VAT was introduced as a mean to accomplish the following:
** To broaden the tax base, thereby spreading the burden of taxation more equitably;
** To establish a fair system because it affects the broadest range of taxpayers so as to ensure more of the people who benefit from public services also contribute to paying for them;
** To create a stable revenue source than previous and existing taxes because it depends only on how much people consume, it is less affected by economic cycles and the shock effect of world events, such as oil prices, foreign wars, acts of terrorism etc. It therefore avoids the economic uncertainties and fluctuations of direct taxation, such as income tax and corporation tax;

** Due to the fact that VAT is a tax on consumption, at the point of sale, there is an immediate cash flow benefit to the Government;
** Substantial amounts of revenue had been generated, even at relatively low tax rates, and the revenue accrues steadily throughout the supply chain;
** Businesses are able to reclaim the VAT they pay on their businesses expenses, there is no tax cascade effect – you don’t pay VAT on VAT, which existed with some of the previous taxes, e.g. consumption tax;
** It is an efficient and relatively inexpensive tax to administer with operating costs typically in the region of only one per cent of the tax yield. Further economies in the overall cost of tax collection have been possible in Guyana because VAT replaced seven existing taxes. This means that a greater proportion of the taxes collected is available to the Government to spend on its social, economic and development programmes, for the benefit of all Guyanese citizens;
** The tax provides for compulsory issue of tax invoices thereby providing an audit trail that gives an element of self – policing. This in turn makes the system less susceptible to fraud and evasion. There are also incentives for businesses to comply voluntarily with their legal obligations;
** Since VAT is a transparent tax, the consumer knows exactly how much tax is being paid and which businesses are authorised to charge the tax;
** Unlike corporation and personal income taxes, VAT does not tax investments and savings. Since VAT is payable on personal income when it is spent on goods and services, rather than when it is earned, this encourages saving rather than spending and indirectly rewards enterprise and encourages economic resilience;
** Since VAT applies only to the domestic consumption of goods and services, the tax incurred in the process of producing exports can be fully identified and refunded, assisting exporters to be competitive in the world market. It does not damage export markets and allows existing businesses to grow;
** It makes the country more attractive for investment purposes;
** Visitors to Guyana making domestic purchases would contribute to the country’s revenue;
** The tax covers a broad range of goods and services and is also effective in controlling the growth of overall consumption. It is not surprising, therefore, that since the mid-1980s, many advanced countries of Europe and Asia have tried to rebalance their tax systems away from a heavy reliance on direct taxes and towards the taxation of consumption.

Types of Registration:
A business must be registered with the VAT Department and display the VAT certificate before charging VAT.

Registration is categorised in Section 11 of the VAT Act of 2005 as being mandatory or voluntary; the criteria governing each type of registration are listed below.

Mandatory Registration:
(a) Where the taxable activity equals or exceeds the threshold of ten million dollars ($10,000,000) at the end of twelve (12) months, or where the taxable activity exceeds the threshold in less than 12 months, the person carrying on the taxable activity must register for VAT, and
(b) Where the taxable activity is expected to exceed the threshold in any period during the next twelve months, the person carrying on the taxable activity must register.

Voluntary Registration:-
If your taxable turnover is below the G$10,000,000.00 threshold, you may apply for Voluntary Registration. However, applicants for voluntary registration must satisfy the following criteria:
(a) The applicant’s business and business location must be easily identifiable;
(b) The applicant must demonstrate to the Commissioner’s satisfaction the ability to maintain records in accordance with the requirements of Section 60 of the VAT Act;
c) The applicant must demonstrate to the Commissioner the intention to make taxable supplies. Where the applicant’s business operations have not yet begun at the time of application, or if the applicant has carried on the business for less than a calendar year; evidence of bank loans and revenue projections, contracts or other details of arrangements to make taxable supplies, feasibility studies, purchase of capital equipment, and similar information may be accepted by the Commissioner as evidence that the applicant intends to make taxable supplies.

Pursuant to Section 66 of the VAT Act, a person who knowingly or recklessly fails to apply for VAT Registration commits an offence and is liable on conviction to a fine not exceeding twenty-five thousand dollars and imprisonment for a term not exceeding two years.

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