Corporation Tax and Business in Guyana By ZENA HENRY
Corporation Tax was introduced to Guyana with respect to and from the year of assessment commencing January 1, 1970 with the enactment of the Corporation Tax Act, Chapter 81:03. The Act generally provides for the imposition of a tax (Corporation Tax) on the chargeable profits of a company. In some countries, Corporation Tax or Corporate Tax as it is also called, makes up a significant sum of the national income and is an important source of revenue generation. Once a company is making money in a particular country, whether resident or not, it is very likely that the organization will have to pay corporate tax on its profits. The Guyanese economy is ready to explode with investment opportunities and international companies are already storming the country’s shores. Given the emergence of the local oil and gas sector, Guyana must start preparing for “unprecedented business activity”, the Minister of Natural Resources, Raphael Trotman, had said at the opening of Guyana’s first ever Petroleum Business Summit and Exhibition (GIPEX), which saw local participants but the majority of exhibitors being from countries around the world. The Guyana Office for Investment (GO-INVEST) is the go-to agency when seeking to invest in Guyana. The Chair of the Board of Directors of GOINVEST, Patricia Bacchus, said at the oil exhibition that the oil and gas industry is significant in the diversification of the country’s economy. She urged all the participants to view the gaps in the country’s economic activities, not as shortcomings, but instead as opportunities. She highlighted business opportunities that would emerge out of the oil sector and the growth of the country in general. She noted the need for economic activities along the value chain in Guyana’s new oil and gas industry and existing sectors. Director of the Guyana Oil and Gas Association, Nigel Hughes, had stated that a huge influx of foreign companies would be coming to Guyana as a result of the new sector. The prominent attorney had related that in any given week, his firm is incorporating 15 to 20 companies for non-Guyanese. He said that last year, 220 Trinidadian companies came to Guyana for a business session. More than 30 US companies came prior to that and about 78 Brazilian companies had come seeking investment opportunities. There are, nonetheless, processes and procedures to be followed when investing in Guyana. One of those is ensuring that foreign companies pay their taxes; in this case, Corporation Tax. Corporate or Corporation Tax is the imposition of a direct tax by a jurisdiction on the income or capital of corporations or similar legal entities. The Guyana Revenue Authority (GRA) is the state agency authorized to assess and collect the tax that is due by the particular company. Corporation tax is paid at the rate of 45 percent of chargeable profits of a telephone company, 45 percent of the chargeable profits of a commercial company other than a telephone company and 27 percent and one half percent of the chargeable profits of any other company. A minimum tax is applied where a commercial company makes less than two percent of the turnover in the year of income. Corporation Tax is payable in
quarterly installments on March, June, September and December 15 based on chargeable profits of the previous year or a sum agreed on with the Commissioner, who also has the power to request advance payments based on actual income for each quarter of the year in which income was earned. For tax purposes, a company is defined as a body corporate or unincorporated but does not include a partnership. Companies are charged corporate tax on “chargeable profits”, the aggregate amount of the profits from sources specified to allow the appropriate deductions and exemptions under the Act. Resident companies, those controlled and managed in Guyana, pay corporation tax on all profits accruing in or derived from Guyana or elsewhere. A non-resident company, where the control and management of the business is exercised outside of Guyana, is charged corporation tax on any income directly or indirectly accruing in or derived from Guyana. A company is deemed to be carrying on a trade in Guyana once it has an office or place of business in Guyana or has branch of agency in the country. There are general rules for computation of profits which entail expenses allowed and those not allowed. There are certain profits subject to corporation tax and some that are not. Any company which is registered in or carrying on business in Guyana is required to file Corporation Tax Return. There is a statutory requirement for companies to submit these returns which are audited by independent auditors and certified to be consistent and in accordance with general accounting principles.