In a continued effort to provide guidance and quality service to stakeholders and the general public on various issues regarding the application of Value-Added Tax (VAT), the Guyana Revenue Authority has prepared this policy to offer clarification on matters regarding the Time of Supply upon the sale of goods and services.
In accordance with Section 4(1)(a) and (b) of the Value-Added Tax (VAT) Act, Chapter 81:05:
(a) a supply of goods means –
(i) a sale of goods;
(ii) a grant of the use or right to use goods, whether with or without a driver, pilot, crew, or operator, under a rental agreement, credit agreement, freight contract, agreement for charter, or other agreement under which such use or right to use is granted; or
(iii) a transfer or provision of thermal or electrical energy, heat, gas, refrigeration, air conditioning, or water; and
(b) a supply of services means anything done which is not a supply of goods or money, including –
(i) the granting, assignment, cessation, or surrender of a right; or
(ii) making available a facility or advantage; or
(iii) refraining from or tolerating an activity.
Further, in accordance with Section 14(1) of the said Act, “a supply of goods or services occurs on the earliest of the date on which:
(a) the goods are delivered or made available or the performance of services is completed;
(b) an invoice for the supply is issued by the supplier; or
(c) any consideration for the supply is received.”
Credit Sales
For example, as a VAT registrant ‘John’ sells goods on credit to ‘Customer A’, on Nov. 1, 2022. The cost of the goods is valued at $100,000 and the VAT chargeable is G$14,000. He issues a tax invoice to ‘Customer A’ for the sale, but does not receive payment for the purchase. John then receives payment the following month on Dec. 10, 2022.
It is important to note that, although John received payment on Dec. 10, 2022, in accordance with Section 14 of the VAT Act Chapter 81:05, he must account for the VAT on the day the goods were sold i.e., Nov. 1, 2022 since the goods were delivered and an invoice was issued on that date.
Hire Purchase
‘John’ decides to sell ‘Customer A’ goods on hire purchase at a cost of G$100,000 and the VAT chargeable is G$14,000. An agreement is signed between the two parties for an initial payment of G$30,000 to be made on Nov. 1, 2022. The remaining balance will be paid at the cost of G$28,000 as monthly installments over the next three (3) months.
Although ‘John’ and ‘Customer A’ have entered into a private agreement regarding the payment for the goods, as a VAT registrant John is required to account for the VAT on the day in which the transaction occurred (i.e. Nov. 1, 2022) and not when the final monthly payment is made.
Contracts
‘Customer A’ visits ‘John’s’ construction company on Nov. 1, 2022 to request his services to have an extension done on his warehouse. The estimated cost of the extension is G$100,000 and G$14,000 is the VAT chargeable. ‘Customer A’ is issued with an invoice and ‘John’ agrees to accept ‘half payment’ up front and the remaining balance to be paid upon completion of the extension which is expected to be completed on Dec. 21, 2022.
As a VAT registrant ‘John’ is required to account for the total VAT for the contract upon receipt of the half payment made on Nov. 1, 2022 and not when the extension is expected to be completed on (i.e. Dec. 21, 2022.). Moreover, irrespective of the dollar value of a contract and the agreement entered into between the supplier and the customer regarding the method of payment (whether half down payment, weekly or monthly), the supplier is required to account for the VAT on the day the agreement is entered into.
Credit Agreement
Essentially, a part payment for a supply will initiate the VAT liability of the supplier on the full value of the supply. Additionally, where a supply of goods or services is rendered under a credit agreement, hire purchase or a contract, the VAT must be accounted for on the same day the transaction was effected irrespective of whether a payment was received on the same day.
Consequently, the onus remains on the registrant to account for the VAT on the earliest of the dates on which an invoice is issued, goods or services are delivered or performance is completed or consideration is received.
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
