The Guyana Revenue Authority in an effort to sensitize the public on legislative changes, has prepared the Value-Added Tax (VAT) on Capital Equipment and Machinery policy.
Section 2 of the VAT Act Chapter 81:05 defines capital goods as “an asset, or a component of an asset, which is of a character subject to an allowance for depreciation or comparable deduction for income tax purposes, and which is used in the course or furtherance of a taxable activity;”
In accordance with the change in legislation which took effect from June 2021, Schedule 1 Paragraph 9 of the VAT Act Chapter 81:05 zero-rates the supplies of capital equipment and machinery used in the mining, forestry, agriculture, construction and manufacturing industries.
Notwithstanding, the following conditions and restrictions applies to the aforementioned items for the zero-rate to be applicable:
1. The equipment and machinery must be used directly by the person (individual/company) for the purpose for which the concession was approved/granted.
2. The equipment and machinery must not be leased, sold or transferred to any other person within five (5) years from the date of first registration.
3. Tax Exemption Letters are required to purchase or import the items at the rate of zero percent, since it is subject to Commissioner-General’s approval.
Therefore, a miner, forester, agriculturist, contractor (construction) and manufacturer who wish to benefit from zero rating of capital equipment and machinery, that person must make relevant electronic application to the Commissioner-General through the ASYCUDA Software and attached the relevant supporting documents. A Tax Exemption letter also known as CG letter, will be prepared for the transaction to be processed free of the relevant duties and taxes through the same system.
Where dealers import such capital equipment and machinery, the procedures for warehousing should be followed and security for taxes must be lodged in the form of a financial bond. It is only when the equipment or machinery is ex-warehoused that VAT will become due. Notwithstanding, zero-rating for specific large capital items of equipment or machinery will be granted to the person using the capital item by way of CG letter.
When an application is approved, the person will be able to obtain the item with no VAT attached. This process is also applicable to the person who imports their equipment and machinery on their own behalf.
Additionally, you will be required to seek the advice and assistance of a Customhouse Broker. A Customshouse Broker is a person who is licenced under the Customs Regulations to transact business with the Customs, Excise and Trade Operations and therefore can make an application for the CG letter.
Kindly see ‘Registered Brokers’
Contact Us:
Tax Advisory Services Section
Communications & Tax Advisory Services Division
Guyana Revenue Authority
200 -201 Camp Street
Georgetown
Guyana
Tel: 227-6060 | 227-8222 Ext: 8000
Email: taxadvisory@gra.gov.gy
Website: www.gra.gov.gy
