The Guyana Revenue Authority has started efforts to go after those private schools that have been dodging the tax system.
According to the revenue collection agency, only 57% of the private schools in Guyana are registered with the GRA and many of them have not been paying their taxes.
With the Commissioner General of the GRA to his right, Minister of Finance Winston Jordan told members of the media today that there is a high level of non compliance by private schools and not just with the GRA.
Many of them have been dodging National Insurance Scheme payments by putting their teachers on contracts and making clear to them that they are responsible for their own PAYE and NIS payments.
“Almost all do not submit returns for their employees, in fact what they do is tell the employees that they are contracted”, the Finance Minister said.
GRA Commissioner General, Godfrey Statia, told the media that demand letters will be dispatched to the private schools that are not tax compliant and they will have to get their taxes in line.
The Finance Minister called a press conference on Thursday morning to confirm that the government was going to keep the 14% Value Added Tax on private tuition fees. He said the tax was introduced as a way of widening the tax base. Mr. Jordan said he would suggest that private schools absorb either some or all of the 14% VAT for parents because they could afford it and would not lose anything, since it could be reclaimed.
He made it clear that private school owners must know that they can only charge the 14% vat on their tuition fees if their annual overall income is $15 Million and over. The great majority of private schools are believed to be earning well above that threshold.
According to Minister Jordan, the top eight private schools earn in excess of $2 Billion annually and prior to the 2017 budget, education services enjoyed zero rated status which enabled the institutions registered for VAT being refunded over $150 million.
He said it must be made clear that the tax is being added to private tuition fees and not to private education. He read out a long list of school supplies and other items for the school that do not attract the value added tax.
Parents he said, would need to pay attention to their bills to ensure they are not paying VAT on items that do not attract the tax.
Some parents of private school students have said that it appears as though the government is adding the tax burden to them rather than to the non tax compliant schools, Minister Jordan said that is not the case, and “I do not want a link seen between the imposition of the 14% on private tuition and the recalcitrance of schools, as it relates to paying or filing the income tax. I said the context within which the 14% was added to private tuition, should be recognised and is the broadening of the tax base, reduction of taxes”.
He said parents should approach the schools about the schools absorbing the tax especially for children whose parents may be considered poor.
Jordans said the government will continue to look at the tax base and if there is the need for changes to be made, those changes will occur.
Many private schools charge tuition fees ranging from $144,000 to $300,000 per year depending on the grade. Jordan said the private schools operate as private businesses and so there is no price control mechanism that he would want to put in place.
He however reavealed that only 20% of the private schools in Guyana are recognized by the Ministry of Education.