─ Provisional licenses to be granted to small businesses pending granting of permits
─ Micro and small enterprises critical drivers of long-term economic growth
─ Over 10,000 unlicensed businesses in operation
The Tax Amendment Bill 2018 was this afternoon passed in the National Assembly. It was laid by Minister of Finance, Winston Jordan.
It seeks to allow the Guyana Revenue Authority (GRA) to help small businesses to start operations pending the granting of building, fire and other permits to formalise their businesses.
The Bill will amend section 71 of the Tax Act to include a provision for the issuance of a provisional license for business premises.
Businesspersons, however, must be able to show that the application for the license is in the process and all efforts are being made to satisfy the requirements.
Minister Jordan, in defending the Bill, said government understands the challenges facing small businesses.
Statistics show that there are over 18, 000 businesses countrywide with only about 7, 500 licensed. According to Minister Jordan, many of them are unlicensed due to no fault of theirs.
The minister said these unlicensed businesses are subject to unfair competition with the licensed businesses.
He informed that the amendment will not target petrol points, pawn shops, money lenders, lumber dealers, cargo vessels, butcher shops, malt and wine, off-license, restaurant, liquor, spirit shops, hotels and members’ clubs.
The amendments to the Tax Act come on the heels of the measures announced in the 2017 National Budget which allows small businesses a “one-time, no questions asked” income tax and National Insurance Scheme (NIS) compliance.
This initiative, the Finance Minister said, has helped many to bid for contracts while they seek to become compliant. It is anticipated that the enactment of this Bill will reap similar benefits.
Highlighting the importance of making formalisation easier, the minister said micro and small enterprises or MSEs are critical drivers of long-term economic growth, innovative capacity and prosperity in developing countries, such as Guyana.
“We can agree, therefore, that MSEs are the best generators of the innovation and competition to lead to strong economic growth,” he posited.
Small businesses make up a large part of the informal economy, and while they are not necessarily the biggest tax evaders, Minister Jordan said, unreported business activities are undesirable and retard real business growth and development by distorting competition and creates scope for corruption.
Therefore, administrative procedures, need to be examined regularly with the aim of creating a more enabling business environment for those who feel shut out of the formal economy.
The Finance Minister argued that start-up MSEs have limited financial resources generally dedicated to the operationalisation of their businesses, therefore, the complexities of formalising their businesses could be a deterrent and burdensome.
“Most times these funds typically originate from loans at interest rates higher than the commercial banks and with shorter repayment terms any details in getting the necessary documentation to start their businesses create additional burdens and consequently can contribute to default on loans,” he pointed out.
The provisional license is to be issued for a period of not more than two years and a fee of 50 percent of the respective annual fee.
Minister Jordan, in responding to a concern raised by the opposition, said an expiry date will not be placed on the amendment, given the large number of unlicensed businesses in existence.
Image: Jules Gibson
- Jordan_:Minister of Finance, Winston Jordan