$134.2B tax concessions in 2018

…doubled under APNU/AFC Govt – AG report
…significant amount for luxury vehicles

When the People’s Progressive Party (PPP) was in power, the then Opposition – APNU/AFC, was intensely critical of the concessions that were being granted to the Private Sector. But the Audit Office has now found that concessions under the current Government have now eclipsed previous years.

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. According to Auditor General Deodat Sharma, this was a 91.97 per cent increase. In fact, the $134 billion it waived represents a large chunk of all monies collected by the Guyana Revenue Authority (GRA) for 2018.
The report notes that a total of 9359 companies benefitted from $104.7 billion in tax concessions. In 2017, this number was 7740 companies, which received $36.4 billion in concessions. In 2014, the last full year that the PPP was in power, there were 8105 companies who benefitted from a mere $41.5 billion, while the sum was $34.4 billion in 2013.
“An analytical review of the total tax exemption granted for the past three years has shown a decrease in the number of exemptions granted. The value of the exemption granted decreased from the year 2015 to 2016 by $36.300 billion or 39.3 per cent. However, for the past two years, 2017 and 2018, there has been an increase of the tax exemption values by 37.5 per cent and 43.4 per cent, respectively,” the report states.

Concessions are usually granted to companies in order to facilitate investments that create jobs and value to the local economy. The Auditor General found, however, that for 2018 “luxurious and modern vehicles attracted great tax exemption of which no payment of taxes was required.”
Moreover, the audit report states that after an analysis of the concessions granted it was found that these lucky individuals paid a total of $5.3 billion in taxes, just four per cent of the billions in taxes that were waived.
When given a chance to respond to the astronomical increase in tax exemptions, the Guyana Revenue Authority (GRA) attributed this to the oil and gas sector and the fact that several investors entered into agreements with the Government.

Other conditional exemptions
The audit report shows that under the category of conditional tax exemptions, 270 foreign-funded projects accounted for $2.5 billion in concessions, while Ministries and Government departments accounted for $4.4 billion.
Meanwhile, churches and charitable organisations accounted for $1.8 billion in concessions. The audit report also included the Auditor General’s findings when the records submitted by the Guyana Office for Investments (GO-Invest) and the Guyana Geology and Mines Commission (GGMC) were perused.
“In accordance with the Investment Act of 2004, an audit of incentives granted to an investor is required to be carried out annually by the Auditor General. According to the record obtained from GO-Invest and GGMC, thirty-seven and twelve incentives were granted respectively,” the report states.
“Of the thirty-seven incentives granted by GO-Invest, only seven were processed, one was denied and one was cancelled by the Authority. The total taxes exempted for the seven incentives processed were $87.962 million, which is 0.8 per cent of the total tax exempted under the category Companies/Businesses. Of the twelve incentives granted by GGMC, only one was processed by the Authority of which total tax exempted for the year was zero.”
According to GRA, it received 37 investment agreements from GO-Invest in 2018, but only 33 met all the requirements and were approved. The remaining four were approved in 2019. In terms of GGMC, GRA stated that it received 11 applications for tax exemptions. Nine were approved in 2018, while two were approved in 2019.
When it comes to unconditional tax exemptions, some $17.9 billion was waived by GRA. This is also an increase from the 2017 amount ($16.3 billion), 2014 ($9.860 billion) and 2013 ($9.802 billion).

Remigrants
The remigrant scheme has its genesis in a drive to encourage overseas-based Guyanese to return from the diaspora to contribute to their homeland. The current Government had claimed that the scheme was abused previously and had vowed to tighten up controls, while paving the way for more youths to access the scheme.
However, the Auditor General documented that 95 per cent of those who were granted re-migrant status and got tax exemptions were between the ages of 55 to 76. Defending this, GRA noted that there is no age limit for re-migrant status.
The AG also documented instances of leakages in 2018. Of the 188 applications processed in that year, two remigrants did not own vehicles they were importing for the six months stipulated by law. In addition, another remigrant applied for a vehicle to be imported that was in the name of someone else.
“Two persons were classified as re-migrants and received tax exemption totalling $25.829 million. However, they were not Guyanese by birth. In addition, the husband of one of these individuals also gained re-migrant status and received tax exemption totalling $702,968.”
In explaining the discrepancies, GRA pointed out that they process exemptions based on the recommendations from the Ministry of Citizenship. Moreover, they noted that there were misunderstandings regarding the other supposed leakages.