Value Added Tax (VAT)
Question & Answer
Q: Why was VAT introduced?
Q: When was Value-Added Tax (VAT) implemented in Guyana?
A: VAT was introduced in Guyana on the January 1, 2007
A: VAT was introduced because:
1. VAT is easier to administer;
2. VAT is a modern tax system;
3. VAT is cheaper to administer;
4. VAT is a fair system;
5. VAT is visible i.e. people know how much tax they pay;
6. VAT is an efficient method of raising revenue. A greater portion of the tax raised will be available to the government for spending on social, economic and infrastructural programmes
Q: What is the rate of the tax?
A: VAT is charged at the standard rate of sixteen percent (16%) however, it is important to note that there are zero rated and exempt items
Q: Is every business man/woman required to charge VAT on the goods/services they provide?
A: Only VAT registrants are permitted to charge the tax to consumers
Q: How would a consumer know if a business is registered to charge VAT?
A: Every VAT registered business is required to display their original VAT Certificate in a prominent place in their business. As such, consumers are encouraged to look for the VAT Certificate before paying the tax over to the business.
Consumers are also reminded that they must not pay VAT to businesses whose VAT Certificate are not displayed.
Q: What is the criteria for VAT registration?
A: 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.
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 applicantâ€™s business and business location must be easily identifiable.
(b) The applicant must demonstrate to the Commissionerâ€™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 applicantâ€™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.
Q. Are there any penalties for a business who fails to register for VAT?
A. 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.
Q. Is anyone required to register for VAT regardless of their taxable turnover?
A. Promoters of public entertainment and Auctioneers are required to register for VAT regardless of their turnover.
Q. Who is a promoter of public entertainment?
A. For VAT purposes a promoter of public entertainment is defines as a person who arranges the staging of public entertainmentâ€� and public entertainment as â€œany musical entertainment, sporting event, theatrical performance, comedy show, dance performance, circus show, any show connected with a festival, or any similar show to which the general public is invited,â€¦.â€� but does not include entertainment organized by, an approved educational institution; or the board of management or a parent teacher association of an approved educational institution; or a person who provides entertainment on a daily or weekly basis; or a religious organisation.
Q. What is public entertainment?
A. Public entertainment means â€œliveâ€� entertainment and includes, sporting events such as, boxing, cricket, football, horse racing and motor racing, theatrical performances, comedy shows, dance performances, dances with live bands and any other similar show to which the public is invited.
However, Bar-B-Ques, limes, fairs or dances with sound systems and disc jockeys playing records are not considered public entertainment for the purpose of VAT.
Q. Are Government Ministries or Agencies of the State required to register for VAT?
A. Government Ministries and Agencies of the State are exempt from VAT, which means they cannot register for VAT.