The Guyana Revenue Authority (GRA) wishes to respond to the contents of a Guyana Times article “134.2B in tax concessions, doubled under APNU/ AFC Government, significant amount of luxury vehicles – AG report”. This article contains such misleading and erroneous representations and statements aimed at discrediting the formidable efforts of the GRA in curtailing revenue loss regarding tax exemptions that it would be remiss of me not to appropriately respond.
Firstly, it must be pointed out that the GRA administers the concession regime and does not grant concessions. Matter of fact, I am repeatedly on record stating my preference for the removal of the concession regime and to replace such with the system of tax credits. Such a system, as practised in the developed nations, allows for improved compliance with the tax laws and conditions of IDAs.
Secondly, the article stated “According to the Audit Report of 2018, some $134.2 billion in concessions were granted for 2018, compared to just $64.3 billion in 2017, a 91.97 per cent increase. The report went on to say that: “In fact, the $134 billion, it (the GRA) waived represents a large chunk of all monies collected by the Guyana Revenue Authority in 2018.” Further, the article noted according to the report “a total 9359 companies benefitted from $104.7 billion in tax concessions”.
For the sake of brevity, I will not expound on all the statutory reasoning and parameters regarding the Exemption Regime. However, for the sake of the learned individuals who should understand how the regime operates but who inexplicably demonstrates selective ignorance, and the Guyanese public who they are trying to convince in this “silly season”, I will again provide some explanations which I hope will bring more clarity and final closure to this matter.
Exemptions are categorically placed into Conditional and Unconditional Schemes, with Conditional Schemes being granted to Companies/Investors/Manufacturers etc which results in investment stimulation, and raw materials for manufacturers. As the category name suggests, the concession is premised on the beneficiaries satisfying certain predefined conditions, both pre and post the exemption granted.
Public officials and remigrants are categorised in the Conditional category as a result of conditions which must be satisfied. Government agencies including budget agencies such as the Office of the Auditor General are also included in this category.
Unconditional Exemptions, however, are specific to international trade agreements that Guyana has with countries, both regionally and internationally. The conditions for these are etched in the trade agreements that were bilaterally agreed upon by countries involved and are not contingent on conditionalities. These include importations from Caricom countries and imports of specific items eg tiles from neighbouring Brazil.
It is patently obvious that the GRA, therefore, can only exert influence in terms of formulating and implementing policies and controls. This will only, therefore, apply to the Conditional category of Exemptions and in limited circumstances to the Unconditional category. The controls for the unconditional category in many cases only involve authenticating relevant trade documents such as country of origin certificate etc. Matter of fact, there is no need to apply for the exemption under this category. This is usually granted automatically if all the relevant documentations are filed with the import documents, but the GRA through Post Clearance activities would check on their authenticity.
There has been so much buzz and fanfare in our country about oil and gas exploration and our recent oil finds. These companies by way of signed Production Sharing Agreements (PSAs) are entitled to significant exemptions upon importation of capital items as preparatory works for the upliftment of oil. In the years 2016-2018, such imports intensified as a result of ramping up preparation for development, production and downstream activities.
I say all of the above to now unequivocally unambiguously and with reservation say that Exemptions (excluding the oil and gas element) under my tenure as Commissioner General, which began in the year 2016, are less in value when compared to the period 2013-2015.
For the period 2013-2015, Conditional Exemptions (excluding the unavoidable oil and gas applicants) were as follows: 2013 – $45.78 billion, 2014 – $53.27 billion and 2015 – $72.72 billion; for the period 2016-2018, this same category was $30.73 billion, $35.80 billion and $43.65 billion respectively. Unconditional Exemptions for the period 2013-2015 totalled $34.09 billion, while the total for 2016-2018 was $49.64 billion.
Under the category of Conditional Exemptions, the main benefactors were the sub category Companies/Business. For the period 2013-2015, Companies and Business benefitted to the tune of $119.04 billion, while for the period 2016-2018, Companies and Business (excluding oil and gas), value was $76.68 billion, some $42.36 billion less when compared with the period 2013-2015.
Remigrants, a category of Conditional Exemptions that was previously abused as was alluded to by previous Auditor General reports, was reduced by $2.56 billion in the period 2016 to 2018 ($5.37 billion during 2013 to 2014, and $2.81 billion during 2016 to 2018). Additionally, public officials reduced by $1.1 billion during the period 2016 to 2018 ($2.83 billion in 2013 to 2015 and $1.73 in 2016-2018).
Any sound analysis that should have guided an informed conclusion or audit opinion on this matter should have been based on empirical data so that readers and users of the report could have deduced the relevant points and then form an informed and well-construed opinion. Regrettably, neither the Auditor General nor the media house that published the article seems inclined to present the Guyanese public with well-informed positions.
As part of the audit process, all IDAs were made available to the staff of the Auditor General for inspection. Further, the PSAs are public documents. Any sound review would have provided an informed analysis as to the reasons for the increase in exemption in certain categories and therefore one would have concluded differently, and certainly more rationally and logically that what is being purported by the media article to be in the AG’s report of 2018. Inexplicably, I am not in possession of such report. I am being guided by Guyana Times which, it appears, has unrestricted and unprecedented access to the report.
While the exemptions administered by the GRA relative to tax collected seems like the perfect fit for a sensationalised headline, the article takes a myopic and chauvinistic view of exemptions by comparing exemptions granted in 2018 with the previous year. A more detailed analysis from 2013 to 2018 would have shown the drastic decrease in both the numbers and the values of exemption 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, in particular, those in the Conditional category, are scrutinised to ensure that they meet specific criteria so as to curtail the significant loss of revenue that resulted from the arbitrary and capricious manner in which such concessions were granted previously.
Further, efforts by the GRA have 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 2016-2018, sterling efforts of the GRA has led to the recovery of in excess of $1 billion dollars (yes, one billion dollars) 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. The very photograph that appears in the Guyana Times article is one such vehicle that was repossessed by the Post Exemption exercise resulting from a breach of an IDA that was given to this company during 2013 to 2015. This is testimony to the fact that the GRA is not oblivious and unmindful to the potential revenue loss from the abuse of the tax exemption scheme, and has taken measures to curtail its abuse.
Our work is in a continuous 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. As the leader of the GRA, my detractors can rest assured that I will remain undeterred by assertions and statements, which for the most part, are baseless and unsubstantiated.
One last note to consider – Could the Auditor General state for the public record when was his agency last audited?
Guyana Revenue Authority (GRA)