IMF to help Guyana in move to reduce Valued Added Tax
GEORGETOWN, Guyana – The Guyana government is considering reducing the Value Added Tax (VAT) in a move that could see the expansion of the tax base. But changes are not likely before the next budget.
At a media conference yesterday, Minister of Finance Winston Jordan said the International Monetary Fund (IMF) has been approached for assistance, and a team from the institution’s Barbados-based Caribbean Regional Technical Assistance Centre is expected to arrive soon to begin its work.
“They (CARTAC) are going to send a one or two-person mission to do a complete assessment of our VAT, where it is today, including options for changes in the system, so it is on the cards,” he said.
“I don’t see it happening before the next budget. It would be extremely difficult to just bring in a VAT reduction in the middle or half of the year, when our budget anyhow is not based on that.”
During the visit, the CARTAC team is expected to conduct an assessment and examine the quantitative work of the Tax Reform Committee.
Back in January, that committee had recommended that VAT be lowered by two percent to 14 percent, along with the introduction of an intermediate rate of seven percent.
The finance minister said the matter is being carefully examined and changes could affect water and electricity services on which VAT is not currently paid.
“In doing the reduction, we will have to expand the base on which the VAT is being applied to recoup lost revenues from the reductions,” Jordan told the media, pointing to Trinidad as an example where the base was broadened when the VAT was reduced.
“Now there are various options for reducing this VAT. What we will want to do is to have the widest possible consultation because some of the options will involve putting the VAT on some things that could cause trouble.”
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