All businesses operating in Guyana—except for those benefiting from tax-related investment incentives—are liable to taxation. As elsewhere, taxes generally fall into two broad categories, direct and indirect. Direct taxes include income tax and corporation tax, while indirect taxes include property tax, capital gains tax, consumption tax (to be replaced with a VAT) and a number of product and service related taxes (e.g. excise taxes, travel taxes, hotel accommodation tax, entertainment tax, telephone tax, etc), many of which will also be replaced by the VAT. Table 3.12 provides a summary of the taxes most likely to impact investors.
Fiscal Enactments Act
1. The Fiscal Enactments (Amendment) (No. 2) Act 2003 provides income and corporation tax relief to firms that meet the following criteria:1. Activities that demonstrably create new employment in one of the following regions: Region 1: Barima-Waini; Region 7: Cuyuni-Mazaruni; Region 9: Upper Takatu-Upper Essequibo; and Region 10: Upper Demerara-Upper Berbice
2. New economic activity in one of the following fields: Non-traditional agro processing (excluding sugar refining, rice milling and chicken farming); information and communications technology (excluding retail and distribution); petroleum exploration, extraction, or refining; mineral exploration, extraction or refining; and tourist or eco-tourist hotels
Income Tax (In the Aid of Industry) Act Under the Act’s provisions, both domestic and foreign investors can benefit from:Initial allowance of 10 percent of the cost of constructing a building or structure for the purpose of operating an eligible activity in the year in which the capital expenditure is incurred. Thereafter, a deduction or allowance of 5 percent per annum is permitted. An initial depreciation allowance of 40 percent on the cost of machinery. The cost of altering an existing building to accommodate the new machinery may be added to the cost of machinery For extraction industries (other than gold, diamonds and petroleum), an initial allowance of 10 percent on the construction of works likely to have little or no value when the source is no longer producing. Thereafter an annual allowance is permitted
Tax allowances on the purchase of patent rights
Deferred income recognition on net proceeds from the sale of patent rights by residents, whereby one-sixth of the proceeds may be recognized each year for six years.
Tax deductions for scientific research expenses. An initial allowance for capital expenditures on scientific research of 60 percent of the expenditure and an annual allowance equal to 10 percent of the expenditure for each of the next 4 years. Subject to conditions, an annual allowance equal to 10 percent of the cost of constructing housing for workers
Double Taxation Treaties
Double taxation treaties currently exist with the United Kingdom, Canada, and CARICOM.Accounting Requirements
Guyana largely follows British conventions and practice in the reporting of accounting information and, more recently, has adopted a number of international accounting standards. Inflation accounting is not allowed. The revaluation of fixed assets, however, is permissible. The Companies Act 1991 stipulates that external reports ought to comply with international accounting standards. Additionally, qualifications of the reports have to be issued by an accountant/accounting firm that is a member of the Institute of Chartered Accountants of Guyana. It is mandatory that public companies publish annual accounts.All companies are obliged by the Income Tax Act (Chapter 8 1: 0 1) and the Companies Act to maintain adequate accounting records that reflect a true and fair view of their operations. Companies are also obligated to file tax returns annually. Generally, accounting records are kept manually but increasingly computerized record keeping is being adopted.
The Institute of Chartered Accountants of Guyana is considered the local accounting body responsible for establishing auditing requirements for companies registered in Guyana.
Exchanging and Remitting Funds
The Guyana dollar is fully convertible. There are no foreign-exchange controls in place, and the foreign currency can typically be acquired at prevailing market rates in addition to a normal transaction fee. Funds can be wired electronically with ease.
Investors may open accounts in the currency of Guyana (the Guyana Dollar) and in foreign convertible currency with any corporate body licensed to carry on banking activity in Guyana under the Banking Act. There are no restrictions on the repatriation of capital and investment income. Residents and non-residents alike have unlimited access to the foreign exchange market to repatriate funds.
Investment Protection and Standards of Treatment
Treatment of Investors
Guyana’s legal framework provides foreign and domestic investors with equal treatment. Foreign and domestic firms have the right to establish and own business enterprises and engage in all forms of remunerative activity. In some industries, licenses are required for foreign and domestic investors to operate a business. (e.g. mining, telecommunications, forestry, banking, and environmental sectors). Foreign investors have equal access to privatization opportunities. For some larger operations, foreign investment is openly preferred.
The Investment Act reinforces the Government’s commitment to neither discriminate between foreign and domestic investors, nor among foreign investors from different countries.
Guyana’s Investment Act of 2004 provides that the Government will protect investments and the property of investors in accordance with the laws of Guyana. The Government shall not compulsorily acquire or take the possession of any investment enterprise, or any asset of an investor, except:
For a purpose which is in accordance with the laws of Guyana
On a non-discriminatory basis
In accordance with the procedures provided by law
There is prompt payment of adequate compensation together with interest calculated from the date of acquisition or taking possession of the investment enterprise or asset to the date of payment at the commercial bank rate on loans to the corporate sector
There is a right of access to the High Court to dispute the respective level of compensation
These expropriation clauses are in conformity with the principles of international law, due process, transparency and compensation.