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VAT Policy #33 – VAT on Zero-Rated Supplies (Revised March 15, 2023)

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VAT Policy #33 – VAT on Zero-Rated Supplies (Revised March 15, 2023)

March 22, 2023

The Guyana Revenue Authority continues to outline the application of Value-Added Tax (VAT) to specific goods and services. This policy therefore provides a better understanding with respect to zero-rated supplies and guidance on the items, which are zero-rated.
Zero-rated supplies are taxable, but at a rate of zero percent (0%) and not fourteen percent (14%), which is considered the standard rate of VAT. The supply of goods and services that are zero-rated are specified in Schedule I of the Value-Added Tax (VAT) Act, Chapter 81:05.

Schedule 1 – Outline of Items that are zero-rated

• Export of Goods
• Export of Services
• Raw Materials and Packaging Materials
• Investment/Local Manufacturing
• Medical Supplies
• Utilities
• Construction
• Agriculture
• Travel and Transportation
• Food Items
• Household Necessities
• State/State Agency/Local Authority
• Educational
• Computer and Internet Data

Zero-rating is a positive tax treatment, therefore businesses, which sell zero-rated supplies, are entitled to input tax credit paid on purchases related to the zero-rated supply.

For example, if a VAT registrant sells animal medication/vitamins, baby formula, cereal, sago, oats, cooking salt, milk, sugar, rice, bleach, paper towels, mouthwash, crutches, wheelchairs, pampers for adults/babies which are all zero-rated, his/her output tax on the supply is zero (0), that is, everything that the VAT registrant sells will also be at the rate of zero percent (0%). However, the VAT registrant can reclaim VAT paid on all supplies purchased for any supplier where VAT at the standard rate was applicable, for example, VAT paid on transportation cost or acquisition cost for the milk, sugar, rice etc.

Section 17 (2) of the VAT Act, Chapter 81:05 states that “Where a taxable person has applied the rate of zero percent to a supply under this section, the taxable person is required to obtain and retain such documentary proof as is acceptable to the Commissioner substantiating the person’s entitlement to apply the zero-rate to the supply”.

In some instances, persons requiring zero-rating benefit of items upon importation must apply to the Tax Exemption, Processing and Verification Division of the Guyana Revenue Authority (GRA). Wherever these specific words are indicated in the VAT Act, “as determined by the Commissioner-General,” “as approved by the Commissioner” and “subject to the satisfaction of the Commissioner-General,” persons are required to apply for the zero-rating of these items.

Contact Us:
Tax Advisory Services Section
Communications & Tax Advisory Services Division
Guyana Revenue Authority
200 -201 Camp Street
Tel: 227-6060 | 227-8222 Ext: 8000
Email: taxadvisory@gra.gov.gy | eservices@gra.gov.gy
Website: www.gra.gov.gy