VAT, PAYE reduced, Tax Threshold, Old-Age Pension increased

GINA, GUYANA, Monday, November 28, 2016

Delivering his third Budget, Minister of Finance Winston Jordan today, announced a series of new plans aimed at continuing the Government’s quest to ensure a good life for all Guyanese.

The Minister delivered Budget 2017, totalling $250B to the National Assembly under the theme “Building a diversified economy and bringing a better life for all Guyanese.”

The following are some of the key measures contained in Budget 2017

Reduce Inequality and Increase Disposable Income

To take effect from January 1, 2017

• Income Threshold increased to $60,000 (per month) from $55,000
• Pay As You Earn (PAYE) reduced fr0m 30 percent to 28 percent for persons earning less than $180,000 per month
• Imposition of a two percent withholding tax on the gross payments made to all contractors.
• Restriction of  Mortgage  Interest  Relief  to  loans  up  to  $15M

Support of the Elderly

• Increase in Old Age Pension to $19,000.
• Increase in Public Assistance to $7,500.

Both increases are to take effect from January 1, 2016.

Workers’ Disposable Income

• Government will continue to engage the unions in negotiations

Green Energy

• Tax exemptions for investment in, and construction of wind and solar energy, water treatment, water recycling and waste disposal facilities.
• A one-off tax holiday of two years for importation of items for wind and solar energy, water treatment, water recycling and waste disposal facilities.
• Exemptions of  customs  duties  and taxes  on  machinery  and  equipment  to setup charging stations for electric vehicles
• Exemptions of customs duties and taxes on greenhouses and component parts for use in the agricultural sector
• The lowering of excise tax on hybrid and electrical vehicles
• Zero-Rate of Excise tax on specially-designed refuse (garbage) trucks;  bio-fuel (bio-gas or bio-diesel)
• Restriction on used tyres, with effect from April 1, 2017
• Custom duties on new tyres reduced from 30% to 15%
• Imposition of an environmental levy of $10 per unit on the importers and local manufacturers of products using non-returnable metal, plastic or glass container of any alcoholic or non-alcoholic beverage.

To Spur Economic Growth

• Reduction of Corporation Tax rate, from 30 percent to 27.5 percent, for manufacturing and non-commercial companies
• The introduction  of  a  dual  tax-rate  for  companies  carrying  out  both commercial and non-commercial activities.
• Automatic Issuance of Temporary Income Tax and NIS Compliance Certificates for all small contractors from participating in the procurement process.
• Value Added Tax (VAT) rate reduced from 16 percent to 14 percent
• Increase in the VAT threshold from $10M to $15M
• Expansion of the list of exempt items and elimination of all zero-rated items,
• 14% VAT on electricity exceeding $10,000 per month
• 14 percent VAT on water use exceeding $1,500 per month

Enhancing Revenue

• Increase in travel tax from $2,500 to $3,500.
• Increase in the fee for a passport from $4,000 to $6,000.
• Removal of passport fee for elderly above 65 years
• Increased fees for transfer of motor vehicle registration for motor cycle and other vehicles, ranging from $5,000 for motor cycles to $25,000 or 2% of sale price
• Imposition of a fee of $2,000 for a Driving Permit issued to drivers residing abroad but visiting the country temporarily
• Imposition of a fee of $2,000 for persons requiring a Letter of Authenticity for verification of drivers’ licences
• Increase in fees for Application and Renewal of Intoxicating Liquor licences
• Increase in penalties relating to licences for Spirituous Liquor

 

By: Macalia Santos