Make overtime work tax-free, remove VAT on local products – GMSA proposes

The Guyana Manufacturing and Services Association (GMSA) wants overtime work to be tax-free along with the removal of property tax and VAT on locally-produced products among other measures to “create a robust foundation for economic growth”.

These measures were proposed to the Government during consultations on the 2024 National Budget and included in the Association’s 2023 Annual Report compiled under the theme “Expanding Trade Horizons Together”.
In arguing for overtime work to be tax-free, the GMSA said: “This can serve as an incentive to employees to support extended work hours per day”, adding that the current severe shortage of skills and manpower affects productivity and project delivery.
Given the current global supply chain crisis, its impact on freight charges and the uncertainty of its longevity, the GMSA noted that measures need to be implemented to cushion the effects on Guyanese businesses and consumers.
To limit shortages and restrain inflationary pressures, it proposed duty be charged only on the Cost Price for items and not on the cost of insurance and Freight (CIF).
To facilitate a more-enabling business environment, it proposes the removal of property tax, noting that “property tax is a wealth tax and ought to be removed too, it is also counter-intuitive to the Governments Housing Drive”. The Government has successfully allocated close to 50,000 house lots across the country since assuming office in 2020.

Removal of VAT
The business association has been a driver of promoting the use of local products across all sub-sectors. As such, it is calling for the removal of VAT on locally-manufactured products and enforcement of legislation to deter local agents from charging VAT on those products to encourage local consumption.
Other proposals call for the removal of VAT on data purchases and packaging materials, and a reduction of VAT to eight per cent for locally-manufactured engineering products. It is also recommended that the VAT reimbursement system be upgraded to be more efficient. (https://www.gra.gov.gy/policy-10-vat-refunds-revised-feb-15-2023/)
GMSA also proposed the removal of VAT on the restocking fee for goods returned, the service charge placed on repairs and servicing of items already purchased, and on inputs for the textile and sewn goods subsectors.
Further, local foods such as chowmein, Chinese sauce, green seasoning, pepper sauce and prepared mustard must be zero-rated, the GMSA noted. The body also calls for medical equipment, consumables and reagents (lab supplies) to be zero-rated without seeking approval from the Commissioner General of the Guyana Revenue Authority (GRA) while adding the duty on these should also be removed.
Other measures proposed to the Government were a reduction of Corporation and Income Tax by five per cent, a reduction for companies that meet the “Guyanese Company” standard set in the local content legislation, removal of Stamp Duty completely on receipts/invoices, removal of VAT on testing equipment and reversion to a single tax rate for businesses that have both a manufacturing and trading section. It also proposed a reduction of tax on the importation of new vehicles between 1500cc and 2000cc to the equivalent of the current flat rate of used vehicles and the removal of the VAT.
“This encourages the creation of rental businesses and concierge services that need modern vehicles. Guyanese would also benefit from cleaner, safer vehicles that require less maintenance,” the GMSA said.
Currently, the double-cab and wagon-type 4×4 off-road vehicles are classified as luxury increasing the associated taxes for users of these vehicles.
The GMSA in this regard asked the Government to re-classify these vehicles to utility vehicles and exempt them from Excise Tax and Duty, since they “are a necessity for the survival of many businesses, especially natural resources and construction”.
Consultations were conducted with Government agencies; Private Sector bodies; Non-Governmental Organisations (NGOs) and others ahead of the budget presentations. The 2024 National Budget was presented on January 15 to the tune of $1.146 trillion.