Finance Minister warns unscrupulous businesses illegally charging VAT

Budget tax exemption measures

Finance Minister Dr Ashni Singh has issued a stern warning to unscrupulous businesses which have been charging 14 per cent Value Added tax (VAT) on items from which the tax has been removed or reduced as part of the Budget 2021 relief measures.
In issuing the warning on Wednesday, Dr Singh said that should these businesses continue to flout the law, they will face the full force of the law, as this illegal practice is denying consumers the right to ultimately enjoy reduced prices on various commodities, including construction materials.
Dr Singh reminded that when the last Budget was passed in the National Assembly on March 4, 2021, it had outlined a number of measures, including the zero-rating or reduction of VAT or duty previously charged on a number of commodities. He said in a statement that, consequently, Order Number 6 of 2021 of the VAT Act Cap.81:05 of the Laws of Guyana came into effect immediately for VAT zero-rating of certain construction materials, namely stone imported for construction and housing from Caribbean Community (CARICOM) countries; locally produced pre-stressed concrete piles, and locally fabricated mild steel beams for building construction; and locally manufactured roofing and PVC products for building construction. Import duty on industrial grade cement was also reduced from 15 percent to five percent.
Additionally, the VAT zero-rate was also restored to basic food items and household necessities that were previously zero-rated up to May 2015 but switched to ‘standard-rate’ or ‘exempt’ over the past five years, e.g., basic wheaten flour, basic breads, oats, unflavoured cracker biscuits, cooking oil, locally produced bed sheets and pillowcases, and toothbrushes.
In his statement, Singh also reminded that, prior to this, an emergency Budget was passed in Parliament on September 25, 2020. This Budget also stipulated the VAT zero rate, or removal of VAT, on other commodities, including the overall removal of VAT on electricity and water. Therefore, since then, VAT would have also been removed from hinterland travel and cell phones, as well as building and construction materials.
He recalled that all of these measures were intended to benefit consumers and ease the expense aligned to these previously burdensome tax measures, and with their removal or reduction, the expectation was that it would have ultimately allowed for the reduction in the cost of living of Guyanese generally.
“It has come to my attention, through various reports from members of the public, that a number of hardware stores have since refused to comply, and are still unscrupulously charging VAT on several items,” the Minister said.
Singh declared that he is therefore warning such establishments that this illegality would not be tolerated. As such, he pointed out that he has already instructed the relevant agency – the Guyana Revenue Authority (GRA) – to ensure that countrywide checks are made to enforce compliance. Additionally, Singh warned that businesses found flouting the laws and continuing to deprive consumers and customers of these benefits would be dealt with according to law.