The Guyana Association of Bankers Inc (GABI) has strongly objected to recent claims by the Guyana Revenue Authority (GRA) that the local banking sector is not satisfying its taxation payment obligations.
In press statement published in today’s edition of Guyana Times, the Association made reference to an article carried in a local newspapers on February 4, 2019 in which Commissioner General Godfrey Statia, said local commercial banks owe approximately $4 billion in corporation taxes.
But according to the GABI, commercial banks and non-bank financial institutions over the years have made all taxation payments to the Government as required by law.
The Association further highlighted that financial statements are prepared, reviewed and finalised in keeping with domestic, regional and international accounting and taxation standards as well as Bank of Guyana regulatory guidelines.
The issue stemmed from Citizens Bank receiving Notices of Assessment from the GRA back in December 2018, claiming additional corporation taxes amounting to some $534,416,000.
At a press conference on Friday, however, Statia explained that “banks are commercial entities in the business of lending and have bad debts; however, while the financial standards allow banks to make provision for these debts in their accounting, the Corporation Tax Act speaks about bad debt in a different light. We deal with actual bad debt – not because you provide for a bad debt means it will actually be bad… You cannot write off that debt as a provision and expect GRA to accept it.”
However, the Bankers Association said that the approach currently employed by the commercial banks has always been accepted by the relevant authority and this has been well-documented and confirmed by the tax collection body.
“GABI has been advised that members have met their tax obligations and is confident that its position is robust and indisputable. GABI members are committed to steadfast and strict adherence to the financial guidelines and to the laws of Guyana as they continue to serve the Guyanese people,” the GABI noted.
The Association had already approached GRA, through the Bank of Guyana (BoG), to come to an agreement on the matter but the tax boss is adamant that he will not change the assessment. In light of this, GABI said it has engaged experienced, legal and accounting minds to pursue this matter to the fullest extent on its behalf.
Statia had explained that the law currently only allows GRA to accept actual bad debt as a write off once the banks can show that sufficient steps were taken to recover the debt.
“We are contributory negligent because we allowed it to go on for years so people were of the opinion that they were doing the right thing,” Statia had pointed out.