Amendments to the 2% Withholding Tax (WHT) for resident Contractors

Payments disbursed to contractors in excess of five hundred thousand dollars are subject to a Withholding Tax of two percent on every payment. This is in accordance with Section 39 Subsection 13 of the Income Tax Act Chapter 81:01.

Based on the 2019 National Budget, the Guyana Revenue Authority (GRA) wishes to highlight the following amendments to the said Act which brings greater clarity to the defnition of contractor and other provisions under the law.

A contractor is defined under the amended Subsection 14 of the Act as “any person who is a resident and who has been awarded a contract for providing or supplying independent personal services for reward, other than as an employee.”.

Subsection 13(a) of the Act, states: - Whereas any person makes any payment in excess of five hundred thousand dollars, either directly or indirectly, to a contractor for the supply of labour or for the hiring of equipment, that person shall deduct tax from the gross amount of that payment, excluding value-added tax at the rate of two percent.

Subsection 13(b): - Any contractor may apply to the Commissioner-General for an exemption from compliance with paragraph (a) which may be granted where the Commissioner-General is satisfied that receipts of that form of income have been regularly disclosed in the returns of income of the contractor and any tax on that income has been paid or secured to the satisfaction of the Commissioner-General.

Subsection 13(c): - Production of evidence of exemption by the contractor to a person making any such payment shall be sufficient authority for the payer to make payment of the gross amount without  deduction of tax.

Subsection 13(d): - In the case of contractors in operation for less than one year, the Commissioner-General may request a deposit representing an advance payment of the tax payable under paragraph (a) and calculated in accordance with information made available to the Commissioner-General.

Subsection 13(e) - The withholding tax paid in respect of any payment in any year of income shall be given credit in computing the tax payable by the contractor for the year of assessment following that year of income.