Georgetown Wednesday, October 24, 2018: The Guyana Revenue Authority (GRA) wishes to respond to the contents of a Kaieteur News article on the Auditor General’s Report titled “Guyana gave away US$321M in tax exemptions but its foreign debt increased by US$82M in 2017”. This article not only contained misleading and erroneous representations and statements aimed at discrediting the formidable efforts of the GRA in curtailing revenue loss regarding tax exemptions, but also implies that the Auditor General’s report spoke on and contained a link between foreign debt and exemptions.
Firstly, it must be pointed that the GRA administers the concession regime and does not grant concessions. Matter of fact, the Commissioner-General, Mr. Godfrey Statia, is on record as stating his preference for the removal of the concession regime and to replace such with the system of tax credits, as practiced in the developed nations, thereby allowing for improved compliance with the tax laws and the conditions of the Investment Development Agreements (IDAs).
Secondly, the article stated that “the Guyana Revenue Authority (GRA) oversaw tax-exemptions to the tune of $64B in 2017, which is even more than the revenue foregone by the same mean in 2016,” and that “Auditors were keen to note that the value of revenue foregone for the year 2017 represents 37.52 percent of the actual revenue collections by the Authority.”
It should be noted that Investment Development Agreements (IDAs), and conditional and unconditional exemptions are granted under Item 11 of the First Schedule, Part III B (ii) of the Customs Act. Of the $64.3B, $16.3B related to unconditional exemptions, the majority of which were related to trade agreements, unless the learned Auditor General is suggesting that the GRA breaches its unconditional trade agreements with the country’s trading partners, and to Government and budget agencies.
All IDAs were made available to the Auditor General for his review, the summation of which, would have provided informed analyses as to the reasons for the increase in exemptions in certain categories and one would have arrived at a different conclusion. To make reference to the fact that the total value of tax exemptions granted in respect of Investment Agreements facilitated through Go-Invest and GGMC could not have been determined is a discreditable excuse when the Auditor General could have so determined it by himself, since within the said agreements, were the exemptions granted. Further, the Auditor General via his staff requested a breakdown of the Companies/Businesses category by specific categories like manufacturing etc. This request was not consistent with the existing breakdown of categories then prepared. However, as an Auditor, the principles and dogmata involved in “auditing controls” should have guided him to state that the GRA indeed has a report but it did not cover specific industries or granular details that the Auditors were interested in at the time, but had advised that since he wanted such specifics, they would be made available in the future.
In light of this request, GRA’s IT Department undertook in 2018 to have an interim solution provided. Notwithstanding this, detailed reports on the exemptions granted to individual companies and businesses were provided to the auditors as was acknowledged in the Auditor-General’s report. As stated, various reports and schedules were provided but could not have been examined by the Auditors in time for the completion of the Auditor General’s report since the information was not readily available in a summarised format. It was agreed that other related documentations would be presented for audit review subsequently. The GRA continues to work along with the Auditor General to provide information in the format requested.
While the exemptions granted relative to tax collection figures seem like the perfect fit for a sensationalised headline, the article takes a myopic view of exemptions by comparing exemptions granted in 2017 with the previous year. A more detailed analysis from 2014 to 2017 would have shown the drastic decrease in both the numbers and the values of exemptions granted over the years.
The GRA from 2016 onwards, under new strategic directions has undertaken several interventions that saw a significant reduction in the number and value of exemptions granted. Requests for tax exemptions are scrutinised to ensure that they meet specific criteria so as to curtail the significant loss of revenue that resulted from the haphazard and fraudulent nature in which concessions were granted in years prior to 2016. Reference can be made to the fiscal year 2015 which recorded total exemptions of $92.4B, an increase of $29.1B or 31.5% over 2014. This diligent approach has resulted in a reduction in exemptions since 2015. In fact, tax exemptions granted in 2016 were reduced by $36.3B (39.3%) as compared to 2015.
Further, efforts by the GRA has not been limited to administering the concessions granted, but also extends to its swift and robust control measures to ensure that beneficiaries are in keeping with conditions committed to in their respective agreements. To this end, over the years 2016 to present, sterling efforts of the GRA has led to the recovery of in excess of $418M from Post Exemption exercises (including sale of seizures to recover taxes) conducted on beneficiaries, who would have otherwise been declared fit and proper for the exemption by external agencies. This is testimony to the fact that the GRA is not oblivious to the potential revenue loss from tax exemptions.
Finally, the headline at first glance, juxtaposes Tax Exemptions with Foreign Debt/Exchange. Other than for sensationalism, it is inexplicable as to how these two issues were conflated and analysed, as obviously, there are many more considerations to be contemplated before one can form a sane nexus between the two concepts. I can only advise the writer to pursue an ECON101 course to familiarise him/herself with the criteria and principles within which to do such an analysis.
Our advice is to read the entire Auditor’s report, and to judge for yourself. The 2017 report on the Guyana Revenue Authority is the best yet over the past decades that the Auditor General has so reported. Our work is in a continued progression mode which can only progressively and incrementally improve as we continue to assiduously pursue our mandate to ensure compliance with Guyana’s trade, tax and border laws and will remain undeterred by assertions and statements, which for the most part, are baseless and unsubstantiated.