How Does VAT Work?
Under the VAT system, both the producers and consumers will benefit. The effective tax rate for most goods will be reduced and the base will be broadened to include most services. Neither goods nor services will be taxed twice as businesses registered for VAT purposes will be able to collect the tax and take a credit for taxes paid on their inputs/purchases. The difference will be paid to the Government.
It is important to note that the business person does not pay over to the GRA all the VAT collected from consumers. The registered business person will deducts all the tax that he/she pays on purchases for the business from the tax collected from consumers and remits the difference to GRA, if there is a balance. In cases where the VAT paid by the business person on purchases for the business is greater than the VAT collected on sales to consumers, the business person will get a refund of the excess amount. This will allow Government to collect portions of the tax at different stages.
Will VAT Increase The Cost of Living?
The Government has always maintained that it will continue to monitor and study how VAT will affect consumers and the cost of living and take appropriate corrective action. It would be expected that some goods and services will increase in prices, while some goods and services will decrease in prices. However, overall, a net increase in the cost of living is not expected. In addition, there are many goods that are subject to the payment of 30% consumption tax, and the prices of these goods are expected to decrease since the goods will be subject to the payment of VAT at a rate of 16%. These goods include:apples, electric irons, baby milk, Flowers, baby suits, food boxes, balloons, Fridge, barbecue sauce, Glucose, baygon, grapes…just to name a few.
The Guyanese Government is convinced that these measures are necessary and appropriate in the context of its poverty alleviation policy agenda, and the imperative of ensuring high quality affordable social services in order to achieve the Millennium Development Goals, and in the interest of increasing Guyanaâ€™s attractiveness as an investment destination which would facilitate high levels of real economic growth.
Learn more at: VAT At a Glance Booklet [Gina Gov]
No comments yet.