Pursuant to Section 2 of the VAT Act, the VAT fraction means the fraction calculated using the formula R/ (1+R); where R is the rate of tax applicable to the taxable sale (14%). The VAT fraction is [14 %/ (1+14%)] which is equal to 7/57.

The VAT fraction is used to compute the amount of tax paid by consumers in cases where the business advertises VAT inclusive pricing and the consumer wants to determine how much VAT was paid. Additionally, the Guyana Revenue Authority (GRA) uses the VAT fraction when businesses which are registered for Value Added Tax (VAT) fail to charge the Tax.

This policy therefore seeks to guide businesses and consumers on the application of the VAT fraction.

Section 90 (1) of the VAT Act states that if a registered person fails to charge VAT then the price that was charged for his/ her goods or services will be deemed to include the VAT. For instance, if a businessman sells a case of drink for $1,000 and does not charge VAT, the GRA will apply the VAT fraction (7/57) as set out below:

$1000 x 7 = $7000

$7000/57 = $123

The business person will have to account to the GRA for $123 VAT on the sale made.

Additionally, consumers who are issued with VAT inclusive invoices (sale invoices) can determine the actual amount of VAT paid on the product or service being purchased by applying the same principle. For example, if a businessman sells the case of drink for $1,000 VAT inclusive to the consumer who wants to determine how much VAT was paid; then the same principle is applied using the VAT fraction (7/57).

$1000 x 7 = $7000

$7000/57 = $123

In this instance, the consumer would have paid $123 in VAT.

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: 1201-1204
Email: gravat@gra.gov.gy
Website: www.gra.gov.gy