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IdentifierCreatedClassificationOrigin
07GEORGETOWN108 2007-01-26 12:24:00 UNCLASSIFIED Embassy Georgetown
Cable title:  

GUYANA'S NEW VAT AND TAX RECIPROCITY - REQUEST TO CONVOKE

Tags:   AMGT ABLD AFIN EAID EFIN GY 
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VZCZCXRO9514
PP RUEHLMC
DE RUEHGE #0108 0261224
ZNR UUUUU ZZH
P 261224Z JAN 07
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 4715
INFO RUEHPH/CDC ATLANTA
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC
					  UNCLAS GEORGETOWN 000108 

SIPDIS

SIPDIS

DS/OFM/TC
WHA/EX
WHA/CAR
STATE FOR TOPEC
USAID FOR LAC/CAR
CDC FOR CDC/COGH/OD

E.O. 12958: N/A
TAGS: AMGT ABLD AFIN EAID EFIN GY
SUBJECT: GUYANA'S NEW VAT AND TAX RECIPROCITY - REQUEST TO CONVOKE
AMBASSADOR

Ref: Georgetown 27



1. Action request para 8 and 9.



2. The Government of Guyana (GoG) instituted a 16% VAT on 1 January


2007. Preparations for the VAT were insufficient at best (Reftel).
The GoG's public education campaign was misleading on many points
causing confusion and discontent among the public and the unprepared
business community.



3. In a December 1 briefing, the Director General of the Ministry of
Foreign Affairs and the Deputy Commissioner of the Guyana Revenue
Authority (GRA) promised the Diplomatic Corps that the GRA will
refund all/all VAT paid by Diplomatic missions, international
organizations, and privileged staff, with no minimum amounts for
reimbursement and that interest will be paid on reimbursement claims
delayed more than one month.



4. However, at the December 1 briefing, GRA was still drafting forms
and procedures, and hiring and training staff. GRA was not able to
provide any specific information about the mechanism by which exempt
missions/staff should file their claims for reimbursement.



5. Neither was the GRA able to provide any information on procedures
for exempt missions/staff to avoid VAT payable directly to GRA on
virtually all imports.



6. Multiple follow up meetings with MFA, GRA, and Minister of
Finance have not provided any more clarity. Post's sense is that
the GoG does wish to implement a system that will refund 100% of VAT
to privileged missions/staff, but is now overwhelmed with the more
fundamental issues of making VAT work on a commercial and political
level. It is not just the diplomatic community that is waiting on
the GRA: the MFA Director General told DCM that the GRA to date has
not provided government agencies with instructions on mechanisms by
which they secure their own statutory exemption from the VAT.



7. In the last week the Guyana Customs Authority, acting on
instruction from GRA, has requested post employees to pay 16% VAT on
the value of consumable shipments and imported POVs, despite Customs
having a letter from the MFA instructing Customs that these imports
should be exempt from VAT. Post has succeeded in getting shipments
released, but each shipment is being handled in an ad hoc manner and
shipments are being delayed during the bureaucratic rangling.
Unlike VAT on retail goods that is included in a price paid to a
merchant, the VAT on imports is payable directly to the government
on the assessed value of the import. The VAT on imports is clearly
a direct tax on diplomatic mission and privledged staff.

Action Request


--------------------------





8. Post requests Department convoke Guyanese Ambassador Bayney
Karran and provide him a gentle reminder of the general and specific
GoG obligations under the
-- Vienna Convention on Diplomatic Relations,
-- 1967 Agreement between the United States and Guyana relating to
the establishment of a Peace Corps program, and
-- 1979 General Agreement for Economic, Technical, and Related
Assistance.



9. Post further requests Department gently inform Ambassador Karran
of the potential impact on Guyana Embassy operations and on USG
funding under the Foreign Assistance Act should Guyana's new VAT
result in changed GoG tax treatment of the U.S. mission, U.S. staff,
and USG assistance programs.

ROBINSON